UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________.
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification Number) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and formal fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of October 24, 2023, the registrant had
Ranpak Holdings Corp.
Quarterly Report on Form 10-Q
For the Period Ended September 30, 2023
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Index to Unaudited Condensed Consolidated Financial Statements
Ranpak Holdings Corp.
Unaudited Condensed Consolidated Balance Sheets – September 30, 2023 and December 31, 2022
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022
Notes to the Unaudited Condensed Consolidated Financial Statements
1
Ranpak Holdings Corp.
Unaudited Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss)
(in millions, except share and per share data)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Paper revenue |
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$ |
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$ |
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$ |
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$ |
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Machine lease revenue |
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Other revenue |
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Net revenue |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Depreciation and amortization expense |
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Other operating expense, net |
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Income (loss) from operations |
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( |
) |
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( |
) |
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( |
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Interest expense |
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Foreign currency (gain) loss |
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( |
) |
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( |
) |
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( |
) |
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Other non-operating income, net |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Loss before income tax expense (benefit) |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Income tax expense (benefit) |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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Two-class method |
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Loss per share |
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Basic |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class A – earnings (loss) per share |
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Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class C – earnings (loss) per share |
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Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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Weighted average number of shares outstanding – Class A and C |
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Basic |
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Diluted |
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Other comprehensive income (loss), before tax |
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Foreign currency translation adjustments |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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$ |
( |
) |
Interest rate swap adjustments |
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( |
) |
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( |
) |
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Cross-currency swap adjustments |
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Total other comprehensive income (loss), before tax |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Provision (benefit) for income taxes related to other comprehensive income (loss) |
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( |
) |
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Total other comprehensive income (loss), net of tax |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Comprehensive loss, net of tax |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
See notes to unaudited condensed consolidated financial statements.
2
Ranpak Holdings Corp.
Unaudited Condensed Consolidated Balance Sheets
(in millions, except share data)
|
|
September 30, 2023 |
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December 31, 2022 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories, net |
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Income tax receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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||
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Liabilities and Shareholders' Equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities and other |
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Current portion of long-term debt |
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Operating lease liabilities, current |
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Deferred revenue |
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Total current liabilities |
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Long-term debt |
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Deferred tax liabilities |
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Derivative instruments |
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Operating lease liabilities, non-current |
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Other liabilities |
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Total liabilities |
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Shareholders' equity |
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Class A common stock, $ |
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Shares issued and outstanding: |
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Convertible Class C common stock, $ |
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Shares issued and outstanding: |
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Additional paid-in capital |
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Accumulated deficit |
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( |
) |
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( |
) |
Accumulated other comprehensive income |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
|
$ |
|
|
$ |
|
||
See notes to unaudited condensed consolidated financial statements.
3
Ranpak Holdings Corp.
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
(in millions, except share data)
|
|
Common Stock |
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Class A |
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Class C |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional Paid-In Capital |
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Accumulated Earnings (Deficit) |
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Accumulated Other Comprehensive Income (Loss) |
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Total |
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||||||||
Balance at December 31, 2021 |
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$ |
- |
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|
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$ |
- |
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|
$ |
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|
$ |
( |
) |
|
$ |
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$ |
|
|||||
Stock-based awards vested and distributed |
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|
- |
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- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Issue Director shares |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
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|
Amortization of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
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||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
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||
Balance at March 31, 2022 |
|
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|
$ |
- |
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|
|
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|
$ |
- |
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|
$ |
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|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock-based awards vested and distributed |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
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|
- |
|
Issue Director shares |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Amortization of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
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||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2022 |
|
|
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Stock-based awards vested and distributed |
|
|
|
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|
- |
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|
- |
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|
- |
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|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Issue Director shares |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Amortization of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
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|
|
- |
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|
- |
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|
||
Net loss |
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|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2022 |
|
|
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
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||||||||
Balance at December 31, 2022 |
|
|
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock-based awards vested and distributed |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Issue Director shares |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Amortization of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
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|
||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Balance at March 31, 2023 |
|
|
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock-based awards vested and distributed |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Issue Director shares |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Amortization of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2023 |
|
|
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock-based awards vested and distributed |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Issue Director shares |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Amortization of restricted stock units |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
||||
See notes to unaudited condensed consolidated financial statements.
4
Ranpak Holdings Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
||||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
||||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
|
|
|
|
||||||
Amortization of deferred financing costs |
|
|
|
|
|
|
||||||
Loss on disposal of fixed assets |
|
|
|
|
|
|
||||||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
||||
Amortization of initial value of interest rate swap |
|
|
( |
) |
|
|
( |
) |
||||
Currency (gain) loss on foreign denominated debt and notes payable |
|
|
|
|
|
( |
) |
|||||
Amortization of restricted stock units |
|
|
( |
) |
|
|
|
|||||
Amortization of cloud-based software implementation costs |
|
|
|
|
|
|
||||||
Unrealized gain on investments in small private businesses |
|
|
|
|
|
( |
) |
|||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||||||
(Increase) decrease in receivables, net |
|
|
( |
) |
|
|
( |
) |
||||
(Increase) decrease in inventory |
|
|
|
|
|
( |
) |
|||||
(Increase) decrease in prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
||||
Increase (decrease) in accounts payable |
|
|
( |
) |
|
|
( |
) |
||||
Increase (decrease) in accrued liabilities |
|
|
|
|
|
( |
) |
|||||
Change in other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
||||
Net cash provided by (used in) operating activities |
|
|
|
|
|
( |
) |
|||||
|
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities |
|
|
|
|
|
|
||||||
Capital expenditures: |
|
|
|
|
|
|
||||||
Converter equipment |
|
|
( |
) |
|
|
( |
) |
||||
Other capital expenditures |
|
|
( |
) |
|
|
( |
) |
||||
Total capital expenditures |
|
|
( |
) |
|
|
( |
) |
||||
Cash paid for investments in small private businesses |
|
|
|
|
|
( |
) |
|||||
Cash inflow from settlement of net investment hedges |
|
|
|
|
|
|
||||||
Patent and trademark expenditures |
|
|
|
|
|
( |
) |
|||||
Proceeds from sale of plant, property, and equipment |
|
|
|
|
|
|
||||||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||
Cash Flows from Financing Activities |
|
|
|
|
|
|
||||||
Proceeds from equipment financing |
|
|
|
|
|
|
||||||
Financing costs of debt facilities |
|
|
( |
) |
|
|
|
|||||
Principal payments on term loans |
|
|
( |
) |
|
|
( |
) |
||||
Payments on finance lease liabilities |
|
|
( |
) |
|
|
( |
) |
||||
Tax payments for withholdings on stock-based awards distributed |
|
|
( |
) |
|
|
( |
) |
||||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
||||
|
|
|
|
|
|
|
||||||
Effect of Exchange Rate Changes on Cash |
|
|
( |
) |
|
|
( |
) |
||||
Net Decrease in Cash and Cash Equivalents |
|
|
( |
) |
|
|
( |
) |
||||
Cash and Cash Equivalents, beginning of period |
|
|
|
|
|
|
||||||
Cash and Cash Equivalents, end of period |
|
$ |
|
|
$ |
|
||||||
See notes to unaudited condensed consolidated financial statements.
5
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
Note 1 — Nature of Operations
Ranpak Holdings Corp. is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-Commerce and industrial supply chains. Through proprietary protective packaging solutions (“PPS”) systems and paper consumables, the Company offers a full suite of protective packaging solutions. The Automated Solutions (“AS”) and Automated Paper Solutions (“APS”) (collectively, “Automation”) product lines provide end-of-line automation systems that solve distinct challenges facing end-users. The Company’s business is global, with a strong presence in the United States and Europe. Throughout this report, when we refer to “Ranpak,” the “Company,” “we,” “our,” or “us,” we are referring to Ranpak Holdings Corp. and all of our subsidiaries, except where the context indicates otherwise.
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
Unaudited Interim Financial Statements — These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for each of the three years ended December 31, 2022, 2021, and 2020, which are included in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 10-K”). The three months ended September 30, 2023 may be further referred to herein as the “third quarter of 2023.” The three months ended September 30, 2022 may be further referred to herein as the “third quarter of 2022.”
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with instructions to Form 10-Q and Rule 10-01 of the Securities and Exchange Commission (“SEC”) Regulation S-X as they apply to interim financial information. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, although we believe that the disclosures made are adequate to make the information not misleading.
The interim condensed consolidated financial statements are unaudited but, in our opinion, include all adjustments that are necessary for a fair statement of operations and financial position for the periods presented. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.
Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material.
Foreign Currency — The nature of business activities involves the management of various financial and market risks, including those related to changes in foreign currency exchange rates. The Company is subject to currency translation exposure because the operations of its subsidiaries are measured in their functional currency, which is the currency of the primary economic environment in which the subsidiary operates. Any currency balances that are denominated in currencies other than the functional currency of the subsidiary are re-measured into the functional currency, with the resulting gain or loss recorded in the foreign currency (gains) losses line-item in our Unaudited Condensed Consolidated Statements of Operations. In turn, subsidiary income statement balances that are denominated in currencies other than USD are translated into USD, our reporting currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the USD are translated into USD in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income.
Recently Adopted Accounting Standards — In December 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which gives optional guidance to provide relief for reference rate reform, where certain transactions have transitioned or are transitioning away from the London Interbank Offered Rate (“LIBOR”) to other reference rates, including one-month and three-month USD LIBOR, on which our existing indebtedness and interest rate swap agreements were based. ASU 2022-06 defers the sunset date of ASC Topic 848, Reference Rate Reform (“ASC 848”) from December 31, 2022 to December 31, 2024 to ensure the relief in ASC 848 covers the period of time during
6
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
which a significant number of modifications may take place. As further disclosed in Note 7, “Long-Term Debt”, we amended the terms of our Credit Agreement to replace the interest rate based on LIBOR and related LIBOR-based mechanics with an interest rate based on the secured overnight financing rate (“SOFR”) and related SOFR-based mechanics. We have elected to apply the practical expedients provided by ASC 848 related to eligible contract modifications as they occur. This election did not have a material impact on our consolidated financial statements, and the impact of applying the election to future eligible contract modifications that occur through December 31, 2024 is also not expected to be material.
Note 3 — Supplemental Balance Sheet Data and Cash Flow Information
Cash and cash equivalents — Cash and cash equivalents include securities with original maturities of three months or less and cash in banks. We are invested in a money market fund, which is classified as a cash equivalent because of its short-term, highly liquid nature that is readily convertible to cash. Unrealized gains or losses are included in other non-operating expense (income), net and were immaterial in all periods presented. The balance was approximately $
Accounts Receivable, net — The components of accounts receivable, net were as follows:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
Accounts receivable |
|
$ |
|
|
$ |
|
||
Allowance for doubtful accounts |
|
|
( |
) |
|
|
( |
) |
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
At September 30, 2023, one customer’s accounts receivable balance represented
Inventories, net — The components of inventories, net were as follows:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work-in-process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventories |
|
|
|
|
|
|
||
Reserve for obsolescence |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
$ |
|
|
$ |
|
||
Property, Plant and Equipment, net — The following table details our property, plant and equipment, net:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||||||
Land |
|
$ |
|
|
$ |
|
||||||
Buildings and improvements |
|
|
|
|
|
|
||||||
Leasehold improvements |
|
|
|
|
|
|
19.4 |
|
|
|
0.4 |
|
Machinery and equipment |
|
|
|
|
|
|
||||||
Computer and office equipment |
|
|
|
|
|
|
|
|
|
11.5 |
|
|
Converting machines |
|
|
|
|
|
|
||||||
Total property, plant, and equipment |
|
|
|
|
|
|
||||||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
||||
Property, plant, and equipment, net |
|
$ |
|
|
$ |
|
||||||
7
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
Depreciation expense included in |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Cost of goods sold |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total depreciation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accrued Liabilities and Other – The components of accrued liabilities and other were as follows:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
Employee compensation |
|
$ |
|
|
$ |
|
||
Taxes |
|
|
|
|
|
|
||
Professional fees |
|
|
|
|
|
|
||
Bonus |
|
|
|
|
|
|
||
Interest |
|
|
|
|
|
|
||
Interest rate swap liability, current portion |
|
|
|
|
|
|
||
Warranty reserve |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Accrued liabilities and other |
|
$ |
|
|
$ |
|
||
Supplemental Cash Flow Information — Supplemental cash flow information is as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Supplemental cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest paid |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income taxes paid |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Non-cash investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures in accounts payable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 4 — Segment and Geographic Information
In accordance with ASC 280, Segment Reporting (“ASC 280”), we determined we have
8
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
We attribute revenue and gross profit to individual countries based on the selling location. Our products are primarily sold from North America and Europe. As previously noted, segment gross profit includes certain depreciation and amortization expenses that are included in cost of goods sold.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe/Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe/Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses excluded from segment gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency (gain) loss |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other non-operating income, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss before income tax expense (benefit) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Our customers are not concentrated in any specific geographic region. During the nine months ended September 30, 2023 and 2022, no customers exceeded
The following table presents our long-lived assets by geographic region. Refer to Note 12, “Leases” for additional detail on our new leased facility in Eygelshoven, The Netherlands and our new leased facility in Shelton, Connecticut:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
North America |
|
$ |
|
|
$ |
|
||
Europe/Asia |
|
|
|
|
|
|
||
Total long-lived assets |
|
$ |
|
|
$ |
|
||
Note 5 — Revenue Recognition, Contracts with Customers
Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. Revenue for paper consumables is recognized based on shipping terms, which is the point in time the customer obtains control of the promised goods. Revenue for Automation equipment sales is recognized based on an input method over time. Maintenance revenue is recognized straight-line on the basis that the level of effort is consistent over the term of the contract. Lease components within contracts with customers are recognized in accordance with ASC 842 on a straight-line basis over the terms of the PPS systems agreements with customers, which have durations of less than one year.
Sales, value-added, and other taxes collected from customers and remitted to governmental authorities are excluded from revenue.
Our paper consumables, automation equipment, and maintenance services are determined to be distinct performance obligations. Free on loan and leased equipment is typically identified as a separate lease component in scope of ASC 842.
We have forms of variable consideration present in our contracts with customers, including rebates and other discounts. We estimate variable consideration using either the expected value method or the most likely amount method. We include in the transaction price some or all of an amount of variable consideration estimated to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
9
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
The time between when a performance obligation is satisfied and when billing and payment occur is closely aligned and performance obligations do not extend beyond one year. The transfer of control of our products results in an unconditional right to receive consideration.
|
Nine Months Ended September 30, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Beginning balance |
$ |
|
|
$ |
|
||
Revenue recognized in excess of billings |
|
|
|
|
|
||
Ending balance |
$ |
|
|
$ |
|
||
Deferred revenue represents contractual amounts received from customers that exceed revenue recognized for automation equipment sales, as well as prepayments for machine fees that are amortized over the next quarter.
|
Nine Months Ended September 30, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Beginning balance |
$ |
|
|
$ |
|
||
Deferral of revenue |
|
|
|
|
|
||
Recognition of revenue |
|
( |
) |
|
|
( |
) |
Ending balance |
$ |
|
|
$ |
|
||
In addition to the disaggregation of revenue between paper, machine lease, and other revenue, we also disaggregate our revenue by segment geography to assist in evaluating the nature, timing, and uncertainty of revenue and cash flows that may be impacted by economic factors:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe/Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total paper and other revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Machine lease revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
North America consists of the United States, Canada and Mexico, among others; Europe/Asia consists of European, Asian (including China), Pacific Rim, South American and African countries, among others.
Note 6 — Goodwill, Long-Lived Assets, Intangible Assets and Impairment
Goodwill, Indefinite-Lived Intangible Assets and Impairment
Goodwill represents the excess of purchase price over the fair value of net assets acquired. Trademarks and trade names are accounted for as indefinite-lived intangible assets and, accordingly, are not subject to amortization. We review goodwill on a reporting unit basis and indefinite-lived assets for impairment annually on October 1st and on an interim basis whenever events or changes in circumstances indicate the carrying value of goodwill or indefinite-lived intangible assets may be impaired.
As of September 30, 2023, there were no indicators to suggest that it is more likely than not that the fair value of our reporting units and indefinite-lived assets were below their carrying values.
10
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
The following table shows our goodwill balances by operating segment that are aggregated into one reportable segment:
|
North America |
|
|
Europe |
|
|
Total |
|
|||
Balance at December 31, 2022 |
$ |
|
|
$ |
|
|
$ |
|
|||
Currency translation |
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2023 |
$ |
|
|
$ |
|
|
$ |
|
|||
Finite-Lived or Amortizable Intangible Assets, net
Finite-lived or amortizable intangible assets consist of patented and unpatented technology, customer/distributor relationships, and other intellectual property.
Impairment of Long-Lived Assets
We review our long-lived assets, including amortizable intangible assets; property, plant and equipment; and lease right-of-use assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For long-lived assets, an impairment loss is indicated when the undiscounted cash flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If indicators exist, the loss is measured as the excess of carrying value over the asset group’s fair value, as determined based on discounted future cash flows, asset appraisal and market values of similar assets. As of September 30, 2023, there were no indicators of impairment present for property, plant and equipment or amortizable intangible assets that required us to test for recoverability.
The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net |
|
||||||
Customer/distributor relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Patented/unpatented technology |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Intellectual property |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total definite-lived intangible assets |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Trademarks/tradenames with indefinite lives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Identifiable intangible assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at September 30, 2023:
Year |
|
|
|
|
|
|
Amount |
|
|
2023 |
|
|
|
|
|
|
$ |
|
|
2024 |
|
|
|
|
|
|
|
|
|
2025 |
|
|
|
|
|
|
|
|
|
2026 |
|
|
|
|
|
|
|
|
|
2027 |
|
|
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
Amortization expense was $
The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of September 30, 2023 and December 31, 2022:
|
|
|
|
|
|
Remaining Weighted-Average Useful Life |
||
|
|
|
|
|
|
September 30, 2023 |
|
December 31, 2022 |
Customer/distributor relationships |
|
|||||||
Patented/unpatented technology |
|
|||||||
Intellectual property |
|
|||||||
Total identifiable assets, net with definite lives |
|
|||||||
11
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
Note 7 — Long-Term Debt
In 2019, the Company entered into a First Lien Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), which consists of senior secured credit facilities of a $
As of September 30, 2023 and December 31, 2022,
Long-term debt consisted of the following:
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|||||
First Lien Dollar Term Facility |
$ |
|
|
$ |
|
|||||
First Lien Dollar Term Facility exit fees payable |
|
|
|
|
|
|
|
|
||
First Lien Euro Term Facility |
|
|
|
|
|
|||||
First Lien Euro Term Facility exit fees payable |
|
|
|
|
|
|||||
Finance lease liabilities |
|
|
|
|
|
|||||
Equipment financing |
|
|
|
|
|
|||||
Deferred financing costs, net |
|
( |
) |
|
|
( |
) |
|||
Total debt |
|
|
|
$ |
|
|
$ |
|
||
Less: current portion of long-term debt |
|
( |
) |
|
|
( |
) |
|||
Less: current portion of finance lease liabilities |
|
( |
) |
|
|
( |
) |
|||
Long-term debt |
$ |
|
|
$ |
|
|||||
The Credit Agreement contains customary events of default, representations and warranties, and affirmative and negative covenants, including restrictions on certain of the Company’s subsidiaries’ ability to incur additional debt and liens or undergo certain fundamental changes, as well as certain financial tests and ratios. We were in compliance with all financial covenants as of September 30, 2023. The Credit Agreement also has customary mandatory prepayment provisions, including the requirement for the borrowers under the Credit Agreement to apply excess cash flow to mandatorily prepay term loans under the Credit Agreement.
On April 4, 2023, the Company entered into the Amendment No. 2 to First Lien Credit Agreement (“Amendment No. 2”) to amend the Credit Agreement to, among other things, replace the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the Credit Agreement with an interest rate based on the SOFR (including a customary spread adjustment) and related SOFR-based mechanics. On June 7, 2023, the Company entered into Amendment No. 3 to First Lien Credit Agreement (“Amendment No. 3”) to amend the Credit Agreement to, among other things, extend the maturity date applicable to the Revolving Facility to June 3, 2025 from June 3, 2024, reduce certain financial covenant ratio levels and modify restrictions on incurrence of incremental debt and other negative covenants. Except as amended by Amendment No. 2 and Amendment No. 3, the remaining terms of the Credit Agreement remain in full force and effect. At the time of Amendment No. 3, the Company also executed the Amendment No. 3 Effective Date and Exit Payment Letter, which provides for a fee of
12
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
As the Company expects repayment to occur after the Second Exit Payment Date, the Company has recorded fees equal to
Note 8 — Derivative Instruments
We use derivatives as part of the normal business operations to manage our exposure to fluctuations in interest rates associated with variable interest rate debt and fluctuations in foreign currency translation associated with our global business presence. These derivatives can help decrease the volatility of cash flows affected by changes in interest rates and foreign currency exchange rates.
Interest Rate Swap Agreements
In January 2019, we entered into a business combination contingent interest rate swap in a notional amount of $
In March 2020, the Amended January 2019 Swap was further amended to lower the rate to
A summary of our interest rate swaps is as follows:
Interest Rate Swap Agreements |
|
Designation |
|
Maturity Date |
|
Rate |
|
Notional Value |
|
|
Debt Instrument Hedged |
|
Percentage of Debt Instrument Outstanding |
|
September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Amended January 2019 Swap |
|
Cash flow hedge |
|
June 1, 2024 |
|
|
|
|
|
First Lien Dollar Term Facility |
|
|||
|
|
|
|
|
|
|
|
$ |
|
|
|
|
||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2019 Swap |
|
Cash flow hedge |
|
June 1, 2023 |
|
|
$ |
|
|
First Lien Dollar Term Facility |
|
|||
Second Amended January 2019 Swap |
|
Cash flow hedge |
|
June 1, 2024 |
|
|
|
|
|
First Lien Dollar Term Facility |
|
|||
|
|
|
|
|
|
|
|
$ |
|
|
|
|
||
The Second Amended January 2019 Swap contains an insignificant financing element that is amortized over the term of the hedging relationship.
As of September 30, 2023, we anticipate having to reclassify $
Cross Currency Swap Agreements
In November 2022, we entered into a fixed-to-fixed cross-currency rate swap contract between the Euro and U.S. dollar to protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates and that we designated as a hedge and accounted for as a net investment hedge (the “November 2022 Swap”). At the spot exchange rate of
13
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
converted notional amounts of approximately $
In April and July 2022, we terminated our previously outstanding February 2022 and April 2022 cross-currency swaps, respectively, resulting in a cash inflow of approximately $
The following table summarizes the total fair values of derivative assets and liabilities and the respective classification in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.
|
|
|
|
Assets (Liabilities) |
|
|||||
|
|
Balance Sheet Classification |
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
Interest Rate Swap Agreements |
|
|
|
|
|
|
|
|
||
Designated as cash flow hedges |
|
Prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
Designated as cash flow hedges |
|
Other assets |
|
|
|
|
|
|
||
Designated as cash flow hedges |
|
Accrued liabilities and other current liabilities |
|
|
( |
) |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Cross-Currency Swap Agreement |
|
|
|
|
|
|
|
|
||
Designated as net investment hedge |
|
Derivative instruments |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
The following table presents the effect of our derivative financial instruments on our unaudited condensed consolidated statements of operations. The income effects of our derivative activities are reflected in interest expense.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Total interest expense presented in the statement of operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest rate swap agreements designated as cash flow hedges |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Cross-currency swap agreement designated as net investment hedge, amounts excluded from effectiveness testing |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 9 — Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) is a separate line within the unaudited condensed consolidated statements of equity that reports our cumulative income (loss) that has not been reported as part of net loss.
|
|
|
|
|
|
September 30, 2023 |
|
|||||||||
|
|
Gross Balance |
|
|
Tax Effect |
|
|
Net Balance |
|
|||||||
Foreign currency translation |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||||
Unrealized gain (loss) on interest rate swaps |
|
|
|
|
|
( |
) |
|
|
|
||||||
Unrealized gain (loss) on cross-currency swap |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Realized gain (loss) on cross-currency swap |
|
|
|
|
|
( |
) |
|
|
|
||||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
14
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
|
|
December 31, 2022 |
|
|||||||||
|
|
Gross Balance |
|
|
Tax Effect |
|
|
Net Balance |
|
|||
Foreign currency translation |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Unrealized gain (loss) on interest rate swaps |
|
|
|
|
|
( |
) |
|
|
|
||
Unrealized gain (loss) on cross-currency swap |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Realized gain (loss) on cross-currency swap |
|
|
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The following table presents the changes in accumulated other comprehensive income (loss) by component:
|
|
Nine Months Ended September 30, 2023 |
|
|||||||||||||||||
|
|
Foreign currency translation |
|
|
Unrealized gain (loss) on interest rate swaps |
|
|
Unrealized gain (loss) on cross-currency swap |
|
|
Realized gain (loss) on cross-currency swap |
|
|
Total |
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Note 10 — Fair Value Measurement
Financial instruments are required to be categorized within a valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
The carrying values of cash and cash equivalents (primarily consisting of bank deposits and a money market fund), accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments as of September 30, 2023 and December 31, 2022.
The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of our financial instruments as of September 30, 2023 and December 31, 2022:
|
|
|
|
|
|
|
Fair Value Measurements |
|
||||||||||
|
|
|
|
Carrying Amount |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Current and long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swap agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Current and long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swap agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
15
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
The money market fund is valued at net asset value and is considered a Level 1 measurement. The money market fund's carrying value approximates its fair value due to the short-term nature of the investment.
The fair value of outstanding long-term debt is based on prices and other relevant information generated by market transactions involving identical or comparable debt instruments, which represents a Level 2 measurement. Derivative positions are classified within Level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets and liabilities in active markets.
Note 11 — Income Taxes
For each interim reporting period, we make an estimate of the effective tax rate we expect to be applicable for the full year for our operations. This estimated effective tax rate is used in providing for income taxes on a year-to-date basis.
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Effective tax rate |
|
|
|
|
||||
The fluctuation in the effective tax rate over the periods presented above was primarily attributable to a tax expense of $
Note 12 — Leases
We lease automobiles, machinery, equipment, warehouses, and office buildings. We account for these leases in accordance with ASC 842 by recording right-of-use assets and lease liabilities. The right-of-use asset represents our right to use underlying assets for the lease term and the lease liability represents our obligation to make lease payments under the leases. We determine if an arrangement is or contains a lease at contract inception and exercise judgment and apply certain assumptions when determining the discount rate, lease term, and lease payments. ASC 842 requires a lessee to record a lease liability based on the discounted unpaid lease payments using the interest rate implicit in the lease or, if the rate cannot be readily determined, the incremental borrowing rate. Generally, we do not have knowledge of the rate implicit in the lease and, therefore, we use the incremental borrowing rate for a lease. The lease term includes the non-cancelable period of the lease plus any additional periods covered by an option to extend that we are reasonably certain to exercise.
In the first quarter of 2023, we commenced a
Operating leases and finance leases are included in the condensed consolidated balance sheets as follows:
|
|
Classification |
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
Lease assets |
|
|
|
|
|
|
|
|
||
Operating lease right-of-use assets, net |
|
Assets |
|
$ |
|
|
$ |
|
||
|
Property, plant, and equipment, net |
|
|
|
|
|
|
|||
Total lease assets |
|
|
|
$ |
|
|
$ |
|
||
Lease liabilities |
|
|
|
|
|
|
|
|
||
Operating lease liabilities, current |
|
Current liabilities |
|
$ |
|
|
$ |
|
||
Operating lease liabilities, non-current |
|
Non-current liabilities |
|
|
|
|
|
|
||
|
Current portion of long-term debt |
|
|
|
|
|
|
|||
|
Long-term debt |
|
|
|
|
|
|
|||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
The components of lease costs, which are included in income from operations in our condensed consolidated statements of operations and comprehensive income (loss), were as follows:
16
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Operating leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease costs |
|
$ |
1.4 |
|
|
$ |
0.7 |
|
|
$ |
|
|
$ |
|
||
Variable lease costs |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
||
Short-term lease costs |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total operating lease costs |
|
$ |
1.5 |
|
|
$ |
0.8 |
|
|
$ |
|
|
$ |
|
||
Finance leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of right-of-use asset |
|
$ |
0.2 |
|
|
$ |
0.1 |
|
|
$ |
|
|
$ |
|
||
Interest on finance lease liabilities |
|
|
0.1 |
|
|
|
- |
|
|
|
|
|
|
|
||
Total finance lease costs |
|
$ |
0.3 |
|
|
$ |
0.1 |
|
|
$ |
|
|
$ |
|
||
Maturities of lease liabilities as of September 30, 2023 are as follows:
|
|
Operating |
|
|
Finance |
|
|
Total |
|
|||
2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2024 |
|
|
|
|
|
|
|
|
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
2027 |
|
|
|
|
|
|
|
|
|
|||
2028 and Thereafter |
|
|
|
|
|
|
|
|
|
|||
Total lease payments |
|
|
|
|
|
|
|
|
|
|||
Less lease interest |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additional information related to leases is presented as follows:
|
|
September 30, 2023 |
|
December 31, 2022 |
Operating leases |
|
|
|
|
Weighted average remaining lease term |
|
|
||
Weighted average discount rate |
|
|
||
Finance leases |
|
|
|
|
Weighted average remaining lease term |
|
|
||
Weighted average discount rate |
|
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
|
|
|
|
|
|
||
Financing cash flows from finance leases |
|
|
|
|
|
|
||
Total cash paid |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Leased assets obtained in exchange for new operating lease liabilities |
|
$ |
|
|
$ |
|
||
Leased assets obtained in exchange for new finance lease liabilities |
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease liabilities |
|
$ |
|
|
$ |
|
||
As previously noted, our machine lease revenue is accounted for under ASC 842 and is recognized on a straight-line basis over the terms of the agreements with customers, which have durations of less than one year.
Note 13 — Commitments and Contingencies
Litigation
We are subject to legal proceedings and claims that arise in the ordinary course of our business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals
17
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company. There are no amounts required to be reflected in these unaudited interim condensed consolidated financial statements related to contingencies for the three and nine months ended September 30, 2023.
Environmental Matters
Our operations are subject to extensive and changing U.S. federal, state and local laws and regulations, as well as the laws of other countries that establish health and environmental quality standards. These standards, among others, relate to air and water pollutants and the management and disposal of hazardous substances and wastes. We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or wastes. There are no amounts required to be reflected in these unaudited interim consolidated financial statements related to environmental contingencies.
Management believes the Company is in compliance, in all material respects, with environmental laws and regulations and maintains insurance coverage to mitigate exposure to environmental liabilities. Management does not believe any environmental matters will have a material adverse effect on the Company’s future consolidated results of operations, financial position or cash flows.
Guarantees
We issue bank guarantees from time to time for various purposes that arise out of the normal course of business. These amounts are immaterial for all periods presented.
Note 14 — Stock-Based Compensation
We expense the fair value of grants of various stock-based compensation programs over the vesting period of the awards. Stock compensation expense is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations. Awards granted are recognized as compensation expense based on the grant date fair value, estimated in accordance with ASC 718, Compensation – Stock Compensation. The grant date fair value is the closing price of our stock on the grant date. Failure to satisfy the threshold service or performance conditions results in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions results in a reversal of previously recognized share-based compensation expense so long as the awards were probable of vesting. Stock compensation expense includes actual forfeitures incurred.
The table below summarizes certain data for our stock-based compensation plans:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Stock-based compensation expense |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Tax (expense) benefit for stock-based compensation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Stock-based compensation expense, net of tax |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The Ranpak Holdings Corp. 2019 Omnibus Incentive Plan (as amended, restated, supplemented or otherwise modified from time to time, the “2019 Plan”) rewards employees and other individuals to perform at their highest level and contribute significantly to the success of the Company. The 2019 Plan is an omnibus plan that may provide these incentives through grants of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSU” or “RSUs”), performance awards, other cash-based awards and other stock-based awards to employees, directors, or consultants of the Company.
As of September 30, 2023, the pool of shares in the 2019 Plan is summarized as follows:
2019 Plan |
|
Quantity |
|
|
Maximum allowed for issuance |
|
|
|
|
Awards granted |
|
|
( |
) |
Awards forfeited |
|
|
|
|
Available for future awards |
|
|
|
|
|
|
|
|
|
Awards vested |
|
|
|
|
18
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
Restricted Stock Units — RSUs represent a right to receive one share of our common stock that is both nontransferable and forfeitable unless and until certain conditions are satisfied. Typically, RSUs vest ratably over a
Performance-Based Restricted Stock Units — Performance-based restricted stock units (“PRSU” or “PRSUs”) represent a right to receive, to the extent vested and earned, one share of our common stock. Our PRSUs generally follow two forms. One form of PRSU vests over a three-year period with the number of the awards to be earned determined at the end of the initial one-year performance period, based upon attainment of specific business performance goals during such initial one-year performance period. If certain minimum performance levels are not attained in the initial one-year performance period, the awards will be automatically forfeited before vesting. The awards are variable in that PRSUs earned could range from
In 2021, certain executive officers and key employees received a special long-term incentive PRSU award (the “2021 LTIP PRSUs”). The 2021 LTIP PRSUs are generally eligible to be earned based on performance against pre-established performance metrics during our 2023, 2024 and 2025 fiscal years. One-third of the 2021 LTIP PRSUs are eligible to be earned and vest on each of January 1, 2024, January 1, 2025, and January 1, 2026 based on the achievement of performance goals during the one-year period immediately preceding the vesting date (each such one-year period, a “2021 LTIP PRSU Measurement Period”), subject to continued employment on each such vesting date. The number of PRSUs eligible to be earned in respect of each such 2021 LTIP PRSU Measurement Period will be equal to one-third of the target number of PRSUs multiplied by a percentage that corresponds to the level of achievement of our performance goals. The awards are variable in that the PRSUs earned could range from
As appropriate, the Company evaluates both its long- and short-term operating plan, and, as part of that evaluation, the likelihood of attaining performance criteria related to management’s variable compensation arrangements. During the second quarter of 2023, management’s assessment of the Company’s attainment of certain performance metrics primarily related to the 2021 LTIP PRSUs resulted in a reduction in expense of approximately $
The fair value of our PRSUs is determined on the grant date. Compensation cost for these awards is recognized based on the probability of achievement of the performance-based conditions.
Activity of our RSUs and PRSUs is as follows:
|
|
RSUs |
|
|
PRSUs |
|
||||||||||
|
|
Quantity |
|
|
Weighted Average Grant Date Fair Value |
|
|
Quantity |
|
|
Weighted Average Grant Date Fair Value |
|
||||
Restricted at December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Outstanding at September 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Director Stock Units — Members of the Company’s Board of Directors (“Director(s)”) may elect to receive their quarterly retainer fees in the form of Class A common shares that are covered by an active shelf registration statement. The retainers are paid quarterly, in arrears in the form of cash or stock at the Director’s election, and vest upon issuance. These shares are priced at the closing price of the last business day of the calendar quarter. Additionally, Directors are granted an annual award of RSUs of $
19
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
Director Stock Units |
|
Quantity |
|
|
Weighted Average Grant Date Fair Value |
|
||
Balance at December 31, 2022 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Balance at September 30, 2023 |
|
|
|
|
$ |
|
||
Note 15 — Earnings (Loss) per Share
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution, if any, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method or if-converted method. Diluted EPS excludes potential shares of common stock if their effect is anti-dilutive. If there is a net loss in any period, basic and diluted EPS are computed in the same manner.
The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between different classes of common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. We apply the two-class method for EPS when computing net income (loss) per Class A and Class C common shares.
As of September 30, 2023, we have not issued any instruments that are considered to be participating securities.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss attributable to common stockholders for basic and diluted EPS |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss per share attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Two-class method: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Class A Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proportionate share of net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class A – basic earnings (loss) per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class A – diluted earnings (loss) per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class C Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proportionate share of net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class C – basic earnings (loss) per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Class C – diluted earnings (loss) per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The dilutive effect of
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
RSUs and PRSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total antidilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
20
Ranpak Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
(in millions, except share and per share data)
Note 16 — Transactions with Related Parties
On June 3, 2019, upon the closing of Ranpak’s business combination with One Madison Corporation, Ranpak entered into a shared services agreement (the “Shared Services Agreement”) with an entity controlled by our chief executive officer, One Madison Group LLC (the “Sponsor”), pursuant to which the Sponsor may provide, or cause to be provided, certain services to Ranpak. The Shared Services Agreement provides for a broad array of potential services, including administrative and “back office” or corporate-type services and requires Ranpak to indemnify the Sponsor in connection with the services provided by the Sponsor to Ranpak. Total fees under the agreement were not material for the third quarter of 2023 and 2022. Total fees under the agreement amounted to approximately $
Note 17 — Shareholders' Equity
On July 26, 2022, the Directors authorized a general share repurchase program of the Company’s Class A common stock of up to $
Note 18 — Assets Held for Sale
In 2021, we entered into a build-to-suit lease agreement for a new Europe/Asia regional headquarters and manufacturing facility in Kerkrade, The Netherlands (the “New Facility”). We completed the construction and occupation of the New Facility in the second quarter of 2023. We own the existing Europe/Asia headquarters and manufacturing facility in Heerlen, The Netherlands. On June 27, 2023, we entered into a definitive agreement to divest our building and land located in Heerlen, The Netherlands at a sale price of $
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are not historical facts are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to estimates, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us taking into account information currently available to us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks include, but are not limited to:
Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from the forward-looking statements. We are not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that the trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with the sections entitled “Risk Factors” and “Forward-Looking Statements,” and our financial statements and related notes included in this Quarterly Report on Form 10-Q as well as the section entitled, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Ranpak included in our 2022 10-K, filed with the SEC on March 31, 2023. Capitalized terms used and not defined herein have the meanings disclosed elsewhere in the Quarterly Report on Form 10-Q.
The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of the Company's control. The
22
Company’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.
Overview
Ranpak is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-commerce and industrial supply chains. Since inception in 1972, we have delivered high quality protective packaging solutions, while maintaining commitment to environmental sustainability. We assemble our PPS systems and provide the PPS systems and paper consumables to customers, which include direct end-users and our network of exclusive paper packaging solution distributors, who in turn place the systems with and sell paper to commercial and industrial users for the conversion of paper into packaging materials. We operate manufacturing facilities in the United States and Europe. For our Automation product lines, we currently have dedicated facilities in Virginia and the Netherlands, with another facility in the United States currently under construction. R Squared Robotics, a division of Ranpak, uses three-dimensional computer vision and artificial intelligence technologies to improve end-of-line packaging and logistics functions. We also maintain sales and administrative offices in Brazil, France, China, Japan, and Singapore. We are a global business that generated approximately 58.3% of our 2022 net revenue outside of the United States.
As of September 30, 2023, we had an installed base of approximately 142.0 thousand PPS systems serving a diverse set of distributors and end-users. We generated net revenue of $245.9 million and $247.1 million in the nine months ended September 30, 2023 and 2022, respectively.
Effect of Currency Fluctuations. As a result of the geographic diversity of our operations, we are exposed to the effects of currency translation, which has affected the comparability of our results of operations between the periods presented in this report and may affect the comparability of our results of operations in future periods. Currency transaction exposure results when we generate net revenue in one currency at one time and incur expenses in another currency at another time, or when we realize gain or loss on intercompany transfers. While we seek to limit currency transaction exposure by matching the currencies in which we incur sales and expenses, we may not always be able to do so.
In addition, we are subject to currency translation exposure because the operations of our subsidiaries are measured in their functional currency, which is the currency of the primary economic environment in which the subsidiary operates. Any currency balances that are denominated in currencies other than the functional currency of the subsidiary are re-measured into the functional currency, with the resulting gain or loss recorded in the foreign currency (gains) losses line-item in our Unaudited Condensed Consolidated Statements of Operations. In turn, subsidiary income statement balances that are denominated in currencies other than USD are translated into USD, our reporting currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the USD are translated into USD in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income.
We hedge some of our exposure to foreign currency translation with a cross-currency swap. Significant currency fluctuations could impact the comparability of results between periods, while such fluctuations coupled with material mismatches in net revenue and expenses could also adversely impact our cash flows. See “Qualitative and Quantitative Disclosures About Market Risk.”
Seasonality. Approximately 31.0% of our net revenue in 2022, either directly or to distributors, was destined for end-users in the e-commerce sectors, whose businesses frequently follow traditional retail seasonal trends, including a concentration of sales in the holiday period in the fourth quarter. Our results tend to follow similar patterns, with the highest net revenue typically recorded in our fourth fiscal quarter and the slowest sales in our first fiscal quarter of each fiscal year. We expect this seasonality to continue in the future and, as a result, our results of operations between fiscal quarters in a given year may not be directly comparable.
Key Performance Indicators and Other Factors Affecting Performance
We use the following key performance indicators and monitor the following other factors to analyze our business performance, determine financial forecasts, and help develop long-term strategic plans.
23
PPS Systems Base — We closely track the number of PPS systems installed with end-users as it is a leading indicator of underlying business trends and near-term and ongoing net sales expectations. Our installed base of PPS systems also drives our capital expenditure budgets. The following table presents our installed base of PPS systems by product line as of September 30, 2023 and 2022:
|
|
September 30, 2023 |
|
|
September 30, 2022 |
|
|
Change |
|
|
% Change |
|
||||
PPS Systems |
|
(in thousands) |
|
|
|
|
||||||||||
Cushioning machines |
|
|
34.8 |
|
|
|
35.4 |
|
|
|
(0.6 |
) |
|
|
(1.7 |
) |
Void-Fill machines |
|
|
84.7 |
|
|
|
81.2 |
|
|
|
3.5 |
|
|
|
4.3 |
|
Wrapping machines |
|
|
22.5 |
|
|
|
22.0 |
|
|
|
0.5 |
|
|
|
2.3 |
|
Total |
|
|
142.0 |
|
|
|
138.6 |
|
|
|
3.4 |
|
|
|
2.5 |
|
Paper and Other Costs. Paper is a key component of our cost of goods sold and paper costs can fluctuate significantly between periods. We purchase both 100% virgin and 100% recycled paper, as well as blends, from various suppliers for conversion into the paper consumables we sell. The cost of paper supplies is our largest input cost, and we historically have negotiated supply and pricing arrangements with most of our paper suppliers annually, with a view towards mitigating fluctuations in paper cost. Nevertheless, as paper is a commodity, its price on the open market, and in turn the prices we negotiate with suppliers at a given point in time, can fluctuate significantly, and is affected by several factors outside of our control, including inflationary pressures, supply and demand and the cost of other commodities that are used in the manufacture of paper, including wood, energy and chemicals. The market for our solutions is competitive and it may be difficult to pass on increases in paper prices to our customers immediately, or at all, which has in the past, and could in the future, adversely affect our operating results. Further, the conflict in Ukraine has increased pricing for paper products as a result of decreased availability of paper products previously sourced from Russian paper mills. During 2022, we eliminated our paper sourcing from Russian suppliers and reallocated our purchases to other mills across the globe. As previously noted, we have seen some stabilization of paper and other costs in North America, however, pricing conditions in Europe remain unsteady, primarily due to the volatility in energy markets. Where we can, we will look to pass increased market costs on to our customers to mitigate the impact of these costs. We are unable to predict our ability to pass these costs on to our customers and how much of these increases we will be able to pass on to our customers. As such, we expect some continued pressure on our gross margin in the medium term relative to our historical margin profile.
Inflationary Pressures and Other Costs. We have continued to experience inflationary pressures in 2023, which have adversely impacted some of our end-users, such as automotive companies; distributors; electronic manufacturers; machinery manufacturers; home goods manufacturers; e-commerce and mail order fulfillment firms; and other end-users that are particularly sensitive to reductions in business and consumer spending by their respective customers, and which in turn have impacted our net revenue. In 2022, inflationary pressures increased the costs of paper as well as shipping and logistics, energy and wages, among other costs. The conflict in Ukraine caused certain headwinds, including (i) increased energy costs, particularly in Europe; (ii) shipping variabilities due to truck driver shortages and (iii) increased shipping times for paper products sourced from Russian paper mills, in addition to increased paper costs discussed above. Higher costs due to inflation and the conflict in Ukraine during 2023 and 2022 were partially offset by price increases, which mitigated the impact on our operating results. However, our ability to predict or further offset inflationary cost increases in the future or during economic downturns or recessions may be limited or impacted by heightened competition for net revenue, an unwillingness by our customers to accept price increase or pressure to reduce selling prices if end-users reduce their volume of purchases. Inflationary pressures and associated increases in interest rates and borrowing costs may also impact the ability of some of our end-users and suppliers to obtain funds for operations and capital expenditures, which could negatively impact our ability to obtain necessary supplies as well as the sales of materials and equipment to affected end-users. This could also result in reduced or delayed collections of outstanding accounts receivable from end-users, which could impact our cash flows. As a result, to the extent inflationary pressures continue, we expect additional pressure on our net revenue and gross margin. We will continue to evaluate the impact of inflationary pressures on our profitability and cash flows as well as our end-users.
Results of Operations
The following tables set forth our results of operations for the three and nine months ended September 30, 2023 and 2022 with line items presented in millions of dollars.
Our condensed consolidated financial statements are prepared in accordance with GAAP. We have, however, also presented below Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and adjusted EBITDA (“AEBITDA”), which are non-GAAP financial measures. We have included EBITDA and AEBITDA because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Adjusting AEBITDA for comparability for constant currency also assists in this comparison as it allows a better insight into the performance of our businesses
24
that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia financial data is derived in Euros. To calculate the adjustment that we apply to present AEBITDA on a constant currency basis, we multiply this Euro-derived data by 1.15 to reflect an exchange rate of 1 Euro to 1.15 USD, which we believe is a reasonable exchange rate to use to give a stable depiction of the business without currency fluctuations between periods, to calculate Europe/Asia data in constant currency USD. An exchange rate of 1.15 approximates the average exchange rate of the Euro to USD over the past five years. We also present non-GAAP constant currency net revenue and derive it in the same manner. We believe that EBITDA and AEBITDA provide useful information to investors and others in understanding and evaluating the Company’s operating results in the same manner as our management and Board of Directors.
However, EBITDA and AEBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. In particular, EBITDA and AEBITDA should not be viewed as substitutes for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. Some of these limitations are:
EBITDA — EBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; and depreciation and amortization.
AEBITDA — AEBITDA is a non-GAAP financial measure that we present on a constant currency basis and calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items; as further adjusted to reflect the performance of the business on a constant currency basis.
In addition, in our discussion below, we include certain other unaudited, non-GAAP constant currency data for the three and nine months ended September 30, 2023 and 2022. This data is based on our historical financial statements included elsewhere in this Quarterly Report on Form 10-Q, adjusted (where applicable) to reflect a constant currency presentation between periods for the convenience of readers. We reconcile this data to our GAAP data for the same period under “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three and nine months ended September 30, 2023 and 2022.
25
Comparison of Third Quarter of 2023 to Third Quarter of 2022
|
|
Three Months Ended September 30, |
|
|||||||||||||
|
|
2023 |
|
|
% Net revenue |
|
|
2022 |
|
|
% Net revenue |
|
||||
Net revenue |
|
$ |
82.8 |
|
|
― |
|
|
$ |
77.8 |
|
|
― |
|
||
Cost of goods sold |
|
|
51.3 |
|
|
|
62.0 |
|
|
|
53.4 |
|
|
|
68.6 |
|
Gross profit |
|
|
31.5 |
|
|
|
38.0 |
|
|
|
24.4 |
|
|
|
31.4 |
|
Selling, general and administrative expenses |
|
|
20.9 |
|
|
|
25.2 |
|
|
|
26.8 |
|
|
|
34.4 |
|
Depreciation and amortization expense |
|
|
8.1 |
|
|
|
9.8 |
|
|
|
7.8 |
|
|
|
10.0 |
|
Other operating expense, net |
|
|
0.9 |
|
|
|
1.1 |
|
|
|
1.5 |
|
|
|
1.9 |
|
Income (loss) from operations |
|
|
1.6 |
|
|
|
1.9 |
|
|
|
(11.7 |
) |
|
|
(15.0 |
) |
Interest expense |
|
|
6.8 |
|
|
|
8.2 |
|
|
|
5.3 |
|
|
|
6.8 |
|
Foreign currency gain |
|
|
(0.7 |
) |
|
|
(0.8 |
) |
|
|
(1.2 |
) |
|
|
(1.5 |
) |
Other non-operating income, net |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(4.0 |
) |
|
|
(5.1 |
) |
Loss before income tax benefit |
|
|
(4.4 |
) |
|
|
(5.3 |
) |
|
|
(11.8 |
) |
|
|
(15.2 |
) |
Income tax benefit |
|
|
(1.1 |
) |
|
|
(1.3 |
) |
|
|
(3.1 |
) |
|
|
(4.0 |
) |
Net loss |
|
$ |
(3.3 |
) |
|
|
(4.0 |
) |
|
$ |
(8.7 |
) |
|
|
(11.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EBITDA |
|
$ |
18.8 |
|
|
|
|
|
$ |
9.6 |
|
|
|
|
||
AEBITDA (Constant Currency) |
|
$ |
18.0 |
|
|
|
|
|
$ |
16.6 |
|
|
|
|
||
Net Revenue
The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the third quarter of 2023 and 2022 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:
|
|
Three Months Ended September 30, |
|
|||||||||||||
|
|
2023 |
|
|
% Net revenue |
|
|
2022 |
|
|
% Net revenue |
|
||||
North America |
|
$ |
34.9 |
|
|
|
42.1 |
|
|
$ |
33.4 |
|
|
|
42.9 |
|
Europe/Asia |
|
|
47.9 |
|
|
|
57.9 |
|
|
|
44.4 |
|
|
|
57.1 |
|
Net revenue |
|
$ |
82.8 |
|
|
|
100.0 |
|
|
$ |
77.8 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cushioning machines |
|
$ |
35.7 |
|
|
|
43.1 |
|
|
$ |
33.4 |
|
|
|
42.9 |
|
Void-Fill machines |
|
|
34.2 |
|
|
|
41.3 |
|
|
|
31.3 |
|
|
|
40.2 |
|
Wrapping machines |
|
|
8.1 |
|
|
|
9.8 |
|
|
|
9.6 |
|
|
|
12.4 |
|
Other |
|
|
4.8 |
|
|
|
5.8 |
|
|
|
3.5 |
|
|
|
4.5 |
|
Net revenue |
|
$ |
82.8 |
|
|
|
100.0 |
|
|
$ |
77.8 |
|
|
|
100.0 |
|
|
|
Non-GAAP Constant Currency |
|
|||||||||||||||||||||
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2023 |
|
|
% Net revenue |
|
|
2022 |
|
|
% Net revenue |
|
|
$ Change |
|
|
% Change |
|
||||||
North America |
|
$ |
34.9 |
|
|
|
40.7 |
|
|
$ |
33.4 |
|
|
|
39.7 |
|
|
$ |
1.5 |
|
|
|
4.5 |
|
Europe/Asia |
|
|
50.8 |
|
|
|
59.3 |
|
|
|
50.7 |
|
|
|
60.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
Net revenue |
|
$ |
85.7 |
|
|
|
100.0 |
|
|
$ |
84.1 |
|
|
|
100.0 |
|
|
$ |
1.6 |
|
|
|
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cushioning machines |
|
$ |
37.1 |
|
|
|
43.3 |
|
|
$ |
36.6 |
|
|
|
43.5 |
|
|
$ |
0.5 |
|
|
|
1.4 |
|
Void-Fill machines |
|
|
35.3 |
|
|
|
41.2 |
|
|
|
33.5 |
|
|
|
39.8 |
|
|
|
1.8 |
|
|
|
5.4 |
|
Wrapping machines |
|
|
8.3 |
|
|
|
9.7 |
|
|
|
9.9 |
|
|
|
11.8 |
|
|
|
(1.6 |
) |
|
|
(16.2 |
) |
Other |
|
|
5.0 |
|
|
|
5.8 |
|
|
|
4.1 |
|
|
|
4.9 |
|
|
|
0.9 |
|
|
|
22.0 |
|
Net revenue |
|
$ |
85.7 |
|
|
|
100.0 |
|
|
$ |
84.1 |
|
|
|
100.0 |
|
|
$ |
1.6 |
|
|
|
1.9 |
|
26
Net revenue for the third quarter of 2023 was $82.8 million compared to $77.8 million in the third quarter of 2022, an increase of $5.0 million or 6.4% year over year. Net revenue was positively impacted by increases in cushioning, void-fill, and other products, partially offset by a decrease in wrapping. Currency rates contributed a benefit of 4.5%, though revenue was negatively affected by lower economic activity, the impact inflationary pressures are having on consumer and corporate budgets, and increased business sponsoring costs. Cushioning increased $2.3 million, or 6.9%, to $35.7 million from $33.4 million; void-fill increased $2.9 million, or 9.3%, to $34.2 million from $31.3 million; wrapping decreased $1.5 million, or 15.6%, to $8.1 million from $9.6 million; and other sales increased $1.3 million, or 37.1%, to $4.8 million from $3.5 million for the third quarter of 2023 compared to the third quarter of 2022. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories. The increase in net revenue is quantified by an increase in the volume of sales of our paper consumable products of approximately 5.2% and a 4.5% decrease in the price or mix of our paper consumable products, partially offset by an increase of 1.1% in sales of automated box sizing equipment. Constant currency net revenue was $85.7 million for the third quarter of 2023, a 1.9% increase from $84.1 million for the third quarter of 2022.
Net revenue in North America for the third quarter of 2023 totaled $34.9 million compared to $33.4 million in the third quarter of 2022. The increase of $1.5 million, or 4.5%, was primarily attributable to increases in void-fill, partially offset by decreases in wrapping, cushioning, and other sales.
Net revenue in Europe/Asia for the third quarter of 2023 totaled $47.9 million compared to $44.4 million in the third quarter of 2022. The increase of $3.5 million, or 7.9%, was driven by increases from void-fill, cushioning and other sales, partially offset by decreases in wrapping. Constant currency net revenue in Europe/Asia was $50.8 million for the third quarter of 2023, a $0.1 million, or 0.2%, increase from $50.7 million for the third quarter of 2022.
Cost of Goods Sold
Cost of goods sold for the third quarter of 2023 totaled $51.3 million, a decrease of $2.1 million, or 3.9%, compared to $53.4 million in the third quarter of 2022. The change was primarily due to lower input costs, offset by higher currency headwinds of approximately 3.9% of the increase over the prior year. Paper pricing decreased which provided relief in the first three quarters of 2023 compared to the inflationary pressures in 2022.
Selling, General and Administrative Expenses (“SG&A”)
SG&A for the third quarter of 2023 was $20.9 million, a decrease of $5.9 million, or 22.0%, from $26.8 million in the third quarter of 2022. The change in SG&A was primarily due to a $11.8 million decrease in stock compensation expense, primarily related to reductions in expense associated with the 2021 LTIP PRSUs. This was offset by currency rate fluctuations of 3.4% over the prior year.
Depreciation and Amortization
Depreciation and amortization expense for the third quarter of 2023 was $8.1 million, an increase of $0.3 million, or 3.8%, from $7.8 million in the third quarter of 2022 primarily due to increased currency rate fluctuations of 2.6% over the prior year.
Other Operating Expense, Net
Other operating expense, net for the third quarter of 2023 was $0.9 million, a decrease of $0.6 million from $1.5 million in the third quarter of 2022. The decrease was primarily due to lower research and development costs in the current quarter compared to the same period in the prior year.
Interest Expense
Interest expense for the third quarter of 2023 was $6.8 million, an increase of $1.5 million, or 28.3%, from $5.3 million in the third quarter of 2022. The change was primarily due to increases in interest rates associated with our First Lien Credit Facilities during the third quarter of 2023 compared to the third quarter of 2022. We incurred additional non-cash expense of $0.3 million from deferred financing costs associated with the amendment of our First Lien Credit Facilities compared to the third quarter of 2022. Additionally, our $50.0 million notional interest rate swap at 1.5% matured on June 1, 2023.
Foreign Currency (Gain) Loss
Foreign currency gain for the third quarter of 2023 was $0.7 million, a change of $0.5 million, or 41.7%, from foreign currency gain of $1.2 million in the third quarter of 2022 due to the volatility in Euro exchange rates compared to USD.
27
Other Non-Operating Income, Net
Other non-operating income, net for the third quarter of 2023 was $0.1 million and represents the unrealized gain on our investment in a money market fund. Other non-operating income, net for the third quarter of 2022 includes a $3.9 million unrealized gain on investment in a small private business.
Income Tax Expense (Benefit)
Income tax benefit for the third quarter of 2023 was $1.1 million, or an effective tax rate of 26.0%. Income tax benefit was $3.1 million in the third quarter of 2022, or an effective tax rate of 26.8%. The fluctuation in the effective tax rate between periods was primarily attributable to a tax expense of $0.5 million related to stock-based compensation shortfall recognized for the three months ended September 30, 2023. The effective tax rate is less than the U.S. federal statutory rate due primarily to stock-based compensation adjustments.
Net Loss
Net loss for the third quarter of 2023 decreased $5.4 million to $3.3 million from a net loss of $8.7 million in the third quarter of 2022. The change was due to the reasons discussed above.
EBITDA and AEBITDA
EBITDA for the third quarter of 2023 was $18.8 million, an increase of $9.2 million, or 95.8%, compared to $9.6 million in the third quarter of 2022. Adjusting for non-recurring costs, AEBITDA for the third quarter of 2023 and 2022 totaled $18.0 million and $16.6 million, respectively, an increase of $1.4 million, or 8.4%.
Comparison of Nine Months Ended September 30, 2023 to Nine Months Ended September 30, 2022
|
|
Nine Months Ended September 30, |
|
|||||||||||||
|
|
2023 |
|
|
% Net revenue |
|
|
2022 |
|
|
% Net revenue |
|
||||
Net revenue |
|
$ |
245.9 |
|
|
― |
|
|
$ |
247.1 |
|
|
― |
|
||
Cost of goods sold |
|
|
156.7 |
|
|
|
63.7 |
|
|
|
169.8 |
|
|
|
68.7 |
|
Gross profit |
|
|
89.2 |
|
|
|
36.3 |
|
|
|
77.3 |
|
|
|
31.3 |
|
Selling, general and administrative expenses |
|
|
64.4 |
|
|
|
26.2 |
|
|
|
86.8 |
|
|
|
35.1 |
|
Depreciation and amortization expense |
|
|
24.2 |
|
|
|
9.8 |
|
|
|
24.0 |
|
|
|
9.7 |
|
Other operating expense, net |
|
|
3.5 |
|
|
|
1.4 |
|
|
|
3.4 |
|
|
|
1.4 |
|
Loss from operations |
|
|
(2.9 |
) |
|
|
(1.2 |
) |
|
|
(36.9 |
) |
|
|
(14.9 |
) |
Interest expense |
|
|
18.4 |
|
|
|
7.5 |
|
|
|
15.2 |
|
|
|
6.2 |
|
Foreign currency (gain) loss |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
(4.1 |
) |
|
|
(1.7 |
) |
Other non-operating income, net |
|
|
(0.8 |
) |
|
|
(0.3 |
) |
|
|
(4.0 |
) |
|
|
(1.6 |
) |
Loss before income tax benefit |
|
|
(20.7 |
) |
|
|
(8.4 |
) |
|
|
(44.0 |
) |
|
|
(17.8 |
) |
Income tax benefit |
|
|
(2.9 |
) |
|
|
(1.2 |
) |
|
|
(9.9 |
) |
|
|
(4.0 |
) |
Net loss |
|
$ |
(17.8 |
) |
|
|
(7.2 |
) |
|
$ |
(34.1 |
) |
|
|
(13.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EBITDA |
|
$ |
47.1 |
|
|
|
|
|
$ |
23.9 |
|
|
|
|
||
AEBITDA (Constant Currency) |
|
$ |
52.1 |
|
|
|
|
|
$ |
53.9 |
|
|
|
|
||
28
Net Revenue
The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the nine months ended September 30, 2023 and 2022 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:
|
|
Nine Months Ended September 30, |
|
|||||||||||||
|
|
2023 |
|
|
% Net revenue |
|
|
2022 |
|
|
% Net revenue |
|
||||
North America |
|
$ |
98.2 |
|
|
|
39.9 |
|
|
$ |
98.6 |
|
|
|
39.9 |
|
Europe/Asia |
|
|
147.7 |
|
|
|
60.1 |
|
|
|
148.5 |
|
|
|
60.1 |
|
Net revenue |
|
$ |
245.9 |
|
|
|
100.0 |
|
|
$ |
247.1 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cushioning machines |
|
$ |
109.9 |
|
|
|
44.7 |
|
|
$ |
107.2 |
|
|
|
43.4 |
|
Void-Fill machines |
|
|
95.5 |
|
|
|
38.8 |
|
|
|
97.4 |
|
|
|
39.4 |
|
Wrapping machines |
|
|
25.8 |
|
|
|
10.5 |
|
|
|
30.8 |
|
|
|
12.5 |
|
Other |
|
|
14.7 |
|
|
|
6.0 |
|
|
|
11.7 |
|
|
|
4.7 |
|
Net revenue |
|
$ |
245.9 |
|
|
|
100.0 |
|
|
$ |
247.1 |
|
|
|
100.0 |
|
|
|
Non-GAAP Constant Currency |
|
|||||||||||||||||||||
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2023 |
|
|
% Net revenue |
|
|
2022 |
|
|
% Net revenue |
|
|
$ Change |
|
|
% Change |
|
||||||
North America |
|
$ |
98.2 |
|
|
|
38.5 |
|
|
$ |
98.6 |
|
|
|
38.1 |
|
|
$ |
(0.4 |
) |
|
|
(0.4 |
) |
Europe/Asia |
|
|
156.9 |
|
|
|
61.5 |
|
|
|
160.4 |
|
|
|
61.9 |
|
|
|
(3.5 |
) |
|
|
(2.2 |
) |
Net revenue |
|
$ |
255.1 |
|
|
|
100.0 |
|
|
$ |
259.0 |
|
|
|
100.0 |
|
|
$ |
(3.9 |
) |
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cushioning machines |
|
$ |
114.6 |
|
|
|
44.9 |
|
|
$ |
113.2 |
|
|
|
43.7 |
|
|
$ |
1.4 |
|
|
|
1.2 |
|
Void-Fill machines |
|
|
98.5 |
|
|
|
38.6 |
|
|
|
101.4 |
|
|
|
39.2 |
|
|
|
(2.9 |
) |
|
|
(2.9 |
) |
Wrapping machines |
|
|
26.6 |
|
|
|
10.4 |
|
|
|
31.5 |
|
|
|
12.2 |
|
|
|
(4.9 |
) |
|
|
(15.6 |
) |
Other |
|
|
15.4 |
|
|
|
6.1 |
|
|
|
12.9 |
|
|
|
4.9 |
|
|
|
2.5 |
|
|
|
19.4 |
|
Net revenue |
|
$ |
255.1 |
|
|
|
100.0 |
|
|
$ |
259.0 |
|
|
|
100.0 |
|
|
$ |
(3.9 |
) |
|
|
(1.5 |
) |
Net revenue for the nine months ended September 30, 2023 was $245.9 million compared to $247.1 million in the nine months ended September 30, 2022, a decrease of $1.2 million or 0.5% year over year. Net revenue was negatively impacted by decreases in void-fill and wrapping, partially offset by increases in cushioning and other products. Revenue was negatively affected by lower economic activity, the impact inflationary pressures are having on consumer and corporate budgets, and increased business sponsoring costs, partially offset by an increase from currency of 1.4%. Cushioning increased $2.7 million, or 2.5%, to $109.9 million from $107.2 million; void-fill decreased $1.9 million, or 2.0%, to $95.5 million from $97.4 million; wrapping decreased $5.0 million, or 16.2%, to $25.8 million from $30.8 million; and other sales increased $3.0 million, or 25.6%, to $14.7 million from $11.7 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The decrease in net revenue is quantified by a decrease in the volume of sales of our paper consumable products of approximately 2.8%, partially offset by a 0.3% increase in the price or mix of our paper consumable products and an increase of 1.0% in sales of automated box sizing equipment. Constant currency net revenue was $255.1 million for the nine months ended September 30, 2023, a 1.5% decrease from $259.0 million for the nine months ended September 30, 2022.
Net revenue in North America for the nine months ended September 30, 2023 totaled $98.2 million compared to $98.6 million in the nine months ended September 30, 2022. The decrease of $0.4 million, or 0.4%, was primarily attributable to decreases in cushioning and wrapping sales, partially offset by increases in void-fill and other sales.
Net revenue in Europe/Asia for the nine months ended September 30, 2023 totaled $147.7 million compared to $148.5 million in the nine months ended September 30, 2022. The decrease of $0.8 million, or 0.5%, was driven by lower void-fill and wrapping, partially offset by increases in cushioning and other sales. Constant currency net revenue in Europe/Asia was $156.9 million for the nine months ended September 30, 2023, a $3.5 million, or 2.2%, decrease from constant currency net revenue of $160.4 million for the nine months ended September 30, 2022.
Cost of Goods Sold
Cost of goods sold for the nine months ended September 30, 2023 totaled $156.7 million, a decrease of $13.1 million, or 7.7%, compared to $169.8 million in the nine months ended September 30, 2022. The change was primarily due to lower input costs over the prior year. This was partially offset by currency rate fluctuations of 0.8% over the prior year. Paper pricing decreased which provided relief in the first three quarters of 2023 compared to the inflationary pressures in 2022.
29
Selling, General and Administrative Expenses (“SG&A”)
SG&A for the nine months ended September 30, 2023 was $64.4 million, a decrease of $22.4 million, or 25.8%, from $86.8 million in the nine months ended September 30, 2022. The change in SG&A was primarily due to a decrease in stock compensation expense, primarily related to reductions in expense associated with the 2021 LTIP PRSUs. Additionally, currency rate fluctuations offset the decrease by 0.5% over the prior year.
Depreciation and Amortization
Depreciation and amortization expense for the nine months ended September 30, 2023 was $24.2 million, an increase of $0.2 million, or 0.8%, from $24.0 million in the nine months ended September 30, 2022. This was primarily due to currency rate fluctuations, which accounted for approximately 0.4% of the increase over the prior year.
Other Operating Expense, Net
Other operating expense, net for the nine months ended September 30, 2023 was $3.5 million, an increase of $0.1 million from $3.4 million in the nine months ended September 30, 2022. The increase in other operating expense, net was primarily due to higher losses on the disposal of property, plant, and equipment of $0.5 million in the current period, partially offset by a $0.4 million decrease in research and development costs over the prior year.
Interest Expense
Interest expense for the nine months ended September 30, 2023 was $18.4 million, an increase of $3.2 million, or 21.1%, from $15.2 million in the nine months ended September 30, 2022. The change was due to increases in interest rates associated with our First Lien Credit Facilities during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. We incurred additional non-cash expense of $0.4 million from deferred financing costs associated with the amendment of our First Lien Credit Facilities compared to the third quarter of 2022. Additionally, our $50.0 million notional interest rate swap at 1.5% matured on June 1, 2023.
Foreign Currency (Gain) Loss
Foreign currency loss for the nine months ended September 30, 2023 was $0.2 million, a change of $4.3 million, or 104.9%, from foreign currency gain of $4.1 million in the nine months ended September 30, 2022 due to the volatility in Euro exchange rates compared to USD.
Other Non-Operating Income, Net
Other non-operating income, net for the nine months ended September 30, 2023 was $0.8 million and represents the unrealized gain on our investment in a money market fund. Other non-operating income, net for the nine months ended September 30, 2022 includes a $3.9 million unrealized gain on investment in a small private business.
Income Tax Expense (Benefit)
Income tax benefit for the nine months ended September 30, 2023 was $2.9 million, or an effective tax rate of 14.2%. Income tax benefit was $9.9 million in the nine months ended September 30, 2022, or an effective tax rate of 22.6%. The fluctuation in the effective tax rate between periods was primarily attributable to a tax expense of $1.8 million related to stock-based compensation shortfall recognized for the nine months ended September 30, 2023. The effective tax rate is less than the U.S. federal statutory rate due primarily to stock-based compensation adjustments.
Net Loss
Net loss for the nine months ended September 30, 2023 decreased $16.3 million to $17.8 million from a net loss of $34.1 million in the nine months ended September 30, 2022. The change was due to the reasons discussed above.
EBITDA and AEBITDA
EBITDA for the nine months ended September 30, 2023 was $47.1 million, an increase of $23.2 million, or 97.1%, compared to $23.9 million in the nine months ended September 30, 2022. Adjusting for non-recurring costs, AEBITDA for the nine months ended September 30, 2023 and 2022 totaled $52.1 million and $53.9 million, respectively, representing a decrease of $1.8 million, or 3.3%.
30
Presentation and Reconciliation of GAAP to Non-GAAP Measures
As noted above, we believe that in order to better understand the performance of the Company, providing non-GAAP financial measures to users of our financial information is helpful. We believe presentation of these non-GAAP measures is useful because they are many of the key measures that allow management to evaluate more effectively our operating performance and compare the results of our operations from period to period and against peers without regard to financing methods or capital structure. Management does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. The computations of EBITDA and AEBITDA may not be comparable to other similarly titled measures of other companies. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, measures of financial performance as determined in accordance with GAAP or as indicators of operating performance.
The following tables and related notes reconcile certain non-GAAP measures, including the non-GAAP constant currency measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023 and 2022:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
||||
Net revenue |
|
$ |
82.8 |
|
|
$ |
77.8 |
|
|
$ |
5.0 |
|
|
|
6.4 |
|
Cost of goods sold |
|
|
51.3 |
|
|
|
53.4 |
|
|
|
(2.1 |
) |
|
|
(3.9 |
) |
Gross profit |
|
|
31.5 |
|
|
|
24.4 |
|
|
|
7.1 |
|
|
|
29.1 |
|
Selling, general and administrative expenses |
|
|
20.9 |
|
|
|
26.8 |
|
|
|
(5.9 |
) |
|
|
(22.0 |
) |
Depreciation and amortization expense |
|
|
8.1 |
|
|
|
7.8 |
|
|
|
0.3 |
|
|
|
3.8 |
|
Other operating expense, net |
|
|
0.9 |
|
|
|
1.5 |
|
|
|
(0.6 |
) |
|
|
(40.0 |
) |
Income (loss) from operations |
|
|
1.6 |
|
|
|
(11.7 |
) |
|
|
13.3 |
|
|
|
(113.7 |
) |
Interest expense |
|
|
6.8 |
|
|
|
5.3 |
|
|
|
1.5 |
|
|
|
28.3 |
|
Foreign currency gain |
|
|
(0.7 |
) |
|
|
(1.2 |
) |
|
|
0.5 |
|
|
|
(41.7 |
) |
Other non-operating income, net |
|
|
(0.1 |
) |
|
|
(4.0 |
) |
|
|
3.9 |
|
|
|
(97.5 |
) |
Loss before income tax benefit |
|
|
(4.4 |
) |
|
|
(11.8 |
) |
|
|
7.4 |
|
|
|
(62.7 |
) |
Income tax expense (benefit) |
|
|
(1.1 |
) |
|
|
(3.1 |
) |
|
|
2.0 |
|
|
|
(64.5 |
) |
Net loss |
|
|
(3.3 |
) |
|
|
(8.7 |
) |
|
|
5.4 |
|
|
|
(62.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense – COS |
|
|
8.3 |
|
|
|
8.3 |
|
|
|
- |
|
|
|
- |
|
Depreciation and amortization expense – D&A |
|
|
8.1 |
|
|
|
7.8 |
|
|
|
0.3 |
|
|
|
3.8 |
|
Interest expense |
|
|
6.8 |
|
|
|
5.3 |
|
|
|
1.5 |
|
|
|
28.3 |
|
Income tax expense (benefit) |
|
|
(1.1 |
) |
|
|
(3.1 |
) |
|
|
2.0 |
|
|
|
(64.5 |
) |
EBITDA(1) |
|
|
18.8 |
|
|
|
9.6 |
|
|
|
9.2 |
|
|
|
95.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments(2): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized (gain) loss translation |
|
|
(0.6 |
) |
|
|
(1.3 |
) |
|
|
0.7 |
|
|
|
(53.8 |
) |
Non-cash impairment losses |
|
|
- |
|
|
|
0.3 |
|
|
|
(0.3 |
) |
|
|
(100.0 |
) |
M&A, restructuring, severance |
|
|
1.5 |
|
|
|
0.1 |
|
|
|
1.4 |
|
|
|
1,400.0 |
|
Amortization of restricted stock units |
|
|
(5.1 |
) |
|
|
6.7 |
|
|
|
(11.8 |
) |
|
|
(176.1 |
) |
Amortization of cloud-based software implementation costs(3) |
|
|
0.7 |
|
|
|
0.7 |
|
|
|
- |
|
|
|
- |
|
Cloud-based software implementation costs |
|
|
0.7 |
|
|
|
1.7 |
|
|
|
(1.0 |
) |
|
|
(58.8 |
) |
Unrealized gain on investment in small private business |
|
|
- |
|
|
|
(3.9 |
) |
|
|
3.9 |
|
|
|
(100.0 |
) |
SOX remediation costs |
|
|
1.0 |
|
|
|
- |
|
|
|
1.0 |
|
|
― |
|
|
Other adjustments |
|
|
0.4 |
|
|
|
0.8 |
|
|
|
(0.4 |
) |
|
|
(50.0 |
) |
Constant currency |
|
|
0.6 |
|
|
|
1.9 |
|
|
|
(1.3 |
) |
|
|
(68.4 |
) |
Constant Currency AEBITDA(1) |
|
$ |
18.0 |
|
|
$ |
16.6 |
|
|
$ |
1.4 |
|
|
|
8.4 |
|
31
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
||||
Net revenue |
|
$ |
245.9 |
|
|
$ |
247.1 |
|
|
$ |
(1.2 |
) |
|
|
(0.5 |
) |
Cost of goods sold |
|
|
156.7 |
|
|
|
169.8 |
|
|
|
(13.1 |
) |
|
|
(7.7 |
) |
Gross profit |
|
|
89.2 |
|
|
|
77.3 |
|
|
|
11.9 |
|
|
|
15.4 |
|
Selling, general and administrative expenses |
|
|
64.4 |
|
|
|
86.8 |
|
|
|
(22.4 |
) |
|
|
(25.8 |
) |
Depreciation and amortization expense |
|
|
24.2 |
|
|
|
24.0 |
|
|
|
0.2 |
|
|
|
0.8 |
|
Other operating expense, net |
|
|
3.5 |
|
|
|
3.4 |
|
|
|
0.1 |
|
|
|
2.9 |
|
Income (loss) from operations |
|
|
(2.9 |
) |
|
|
(36.9 |
) |
|
|
34.0 |
|
|
|
(92.1 |
) |
Interest expense |
|
|
18.4 |
|
|
|
15.2 |
|
|
|
3.2 |
|
|
|
21.1 |
|
Foreign currency gain |
|
|
0.2 |
|
|
|
(4.1 |
) |
|
|
4.3 |
|
|
|
(104.9 |
) |
Other non-operating income, net |
|
|
(0.8 |
) |
|
|
(4.0 |
) |
|
|
3.2 |
|
|
|
(80.0 |
) |
Loss before income tax benefit |
|
|
(20.7 |
) |
|
|
(44.0 |
) |
|
|
23.3 |
|
|
|
(53.0 |
) |
Income tax benefit |
|
|
(2.9 |
) |
|
|
(9.9 |
) |
|
|
7.0 |
|
|
|
(70.7 |
) |
Net loss |
|
|
(17.8 |
) |
|
|
(34.1 |
) |
|
|
16.3 |
|
|
|
(47.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense – COS |
|
|
25.2 |
|
|
|
28.7 |
|
|
|
(3.5 |
) |
|
|
(12.2 |
) |
Depreciation and amortization expense – D&A |
|
|
24.2 |
|
|
|
24.0 |
|
|
|
0.2 |
|
|
|
0.8 |
|
Interest expense |
|
|
18.4 |
|
|
|
15.2 |
|
|
|
3.2 |
|
|
|
21.1 |
|
Income tax benefit |
|
|
(2.9 |
) |
|
|
(9.9 |
) |
|
|
7.0 |
|
|
|
(70.7 |
) |
EBITDA(1) |
|
|
47.1 |
|
|
|
23.9 |
|
|
|
23.2 |
|
|
|
97.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments(2): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gain translation |
|
|
0.2 |
|
|
|
(4.2 |
) |
|
|
4.4 |
|
|
|
(104.8 |
) |
Non-cash impairment losses |
|
|
0.9 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
|
80.0 |
|
M&A, restructuring, severance |
|
|
3.0 |
|
|
|
1.7 |
|
|
|
1.3 |
|
|
|
76.5 |
|
Amortization of restricted stock units |
|
|
(11.8 |
) |
|
|
20.8 |
|
|
|
(32.6 |
) |
|
|
(156.7 |
) |
Amortization of cloud-based software implementation costs(3) |
|
|
2.2 |
|
|
|
2.1 |
|
|
|
0.1 |
|
|
|
4.8 |
|
Cloud-based software implementation costs |
|
|
3.1 |
|
|
|
6.5 |
|
|
|
(3.4 |
) |
|
|
(52.3 |
) |
Unrealized gain on investment in small private business |
|
|
- |
|
|
|
(3.9 |
) |
|
|
3.9 |
|
|
|
(100.0 |
) |
SOX remediation costs |
|
|
3.4 |
|
|
|
- |
|
|
|
3.4 |
|
|
― |
|
|
Other adjustments |
|
|
1.8 |
|
|
|
3.3 |
|
|
|
(1.5 |
) |
|
|
(45.5 |
) |
Constant currency |
|
|
2.2 |
|
|
|
3.2 |
|
|
|
(1.0 |
) |
|
|
(31.3 |
) |
Constant Currency AEBITDA(1) |
|
$ |
52.1 |
|
|
$ |
53.9 |
|
|
$ |
(1.8 |
) |
|
|
(3.3 |
) |
(see subsequent footnotes)
(1) Reconciliations of EBITDA and AEBITDA for each period presented are to net (loss) income, the nearest GAAP equivalent.
(2) Adjustments are related to non-cash unusual or infrequent costs such as: effects of non-cash foreign currency remeasurement or adjustment; impairment of returned machines; costs associated with the evaluation of acquisitions; costs associated with executive severance; costs associated with restructuring actions such as plant rationalization or realignment, reorganization, and reductions in force; costs associated with the implementation of the global ERP system; and other items deemed by management to be unusual, infrequent, or non-recurring.
(3) Represents amortization of capitalized costs related to the implementation of the global ERP system, which are included in SG&A.
Liquidity and Capital Resources
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service, acquisitions, other commitments and contractual obligations. We evaluate liquidity in terms of cash flows from operations and other sources and the sufficiency of such cash flows to fund our operating, investing and financing activities.
We believe that our cash balances together with borrowing capacity under the revolving portion of the Facilities will provide us with sufficient resources to cover our current requirements. Our main liquidity needs relate to capital expenditures and expenses for the production and maintenance of PPS systems placed at end-user facilities, working capital, including the purchase of paper raw materials, and payments of principal and interest on our outstanding debt. We expect our capital expenditures to increase as we continue to grow our business, expand our manufacturing footprint, and upgrade our existing systems and facilities. We continue to evaluate our inventory requirements and adjust according to our volume forecasts. Our future capital requirements and the adequacy of available funds will depend on many factors, and if we are unable to obtain needed additional funds, we may have to reduce our operating costs or incur additional debt, which could impair our growth prospects and/or otherwise negatively impact our business. Further, volatility in the equity and credit markets resulting from the conflict in Ukraine, or other macroeconomic factors could make obtaining new equity or debt financing more difficult or expensive.
32
We had $52.1 million in cash and cash equivalents as of September 30, 2023 and $62.8 million as of December 31, 2022. Including finance lease liabilities and excluding deferred financing costs, we had $400.0 million in debt, $2.3 million of which was classified as short-term, as of September 30, 2023, compared to $396.9 million in debt, $2.4 million of which was classified as short-term, as of December 31, 2022. At September 30, 2023, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility through October 31, 2023.
Share Repurchase Program
On July 26, 2022, the Directors authorized a general share repurchase program of our Class A common stock of up to $50.0 million, with a 36-month expiration. These Class A common stock repurchases may occur in transactions that may include, without limitation, tender offers, open market purchases, accelerated share repurchases, negotiated block purchases, and transactions effected through plans under Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual amount of shares repurchased will depend on a variety of different factors and may be modified, suspended or terminated at any time at the discretion of the Directors. There have been no repurchases executed to date.
Debt Profile
The material terms of the Facilities are summarized in Note 7, “Long-Term Debt” to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. The First Lien Term Facility matures in 2026 and the Revolving Facility matures in 2025. As of September 30, 2023 and December 31, 2022, no amounts were outstanding under the Revolving Facility. Borrowings under the Facilities, at our option, bear interest at either (1) an adjusted eurocurrency rate or, as of the effectiveness of Amendment No. 2, the SOFR rate, or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings or SOFR borrowings, as applicable, and 2.75% with respect to base rate borrowings, in each case assuming a first lien net leverage ratio of less than 5.00:1.00, subject to a leverage-based step-up to an applicable margin equal to 4.00% for eurocurrency borrowings and SOFR borrowings, as applicable, and 3.00% with respect to base rate borrowings. The interest rate for the First Lien Dollar Term Facility as of September 30, 2023 and December 31, 2022, was 9.43% and 7.88%, respectively. The interest rate for the First Lien Euro Term Facility as of September 30, 2023 and December 31, 2022, was 7.66% and 5.25%, respectively. Global interest rates have risen meaningfully in 2023 and we expect interest on our Facilities to increase.
The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5.0 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility. As of September 30, 2023, we had $1.3 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $43.7 million.
The Facilities will provide us with the option to increase commitments under the Facilities in an aggregate amount not to exceed the greater of $95.0 million and 100% of Consolidated Adjusted EBITDA (as defined in the definitive documentation with respect to the Facilities) for the four consecutive fiscal quarters most recently ended, plus any voluntary prepayments of the First Lien Term Facility (and, in the case of the Revolving Facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the Revolving Facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.
Cash Flows
The following table sets forth our summary cash flow information for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net cash provided by (used in) operating activities |
|
$ |
23.0 |
|
|
$ |
(9.5 |
) |
Net cash used in investing activities |
|
|
(32.0 |
) |
|
|
(27.1 |
) |
Net cash used in financing activities |
|
|
(1.4 |
) |
|
|
(4.3 |
) |
Effect of Exchange Rate Changes on Cash |
|
|
(0.3 |
) |
|
|
(1.7 |
) |
Net Decrease in Cash and Cash Equivalents |
|
|
(10.7 |
) |
|
|
(42.6 |
) |
Cash and Cash Equivalents, beginning of period |
|
|
62.8 |
|
|
|
103.9 |
|
Cash and Cash Equivalents, end of period |
|
$ |
52.1 |
|
|
$ |
61.3 |
|
33
Cash Flows Provided by (Used in) Operating Activities
Net cash provided by operating activities was $23.0 million in the nine months ended September 30, 2023. Cash used in operating activities was $9.5 million in the nine months ended September 30, 2022. The changes in operating cash flows are largely due to the decreased net loss for the current period compared with prior year and changes in working capital adjustments.
Cash Flows Used in Investing Activities
Net cash used in investing activities was $32.0 million in the nine months ended September 30, 2023 and reflects cash used for production of converter equipment and leasehold improvements for our new facilities in Connecticut and The Netherlands, net of $2.9 million in proceeds from the sale of our building and land located in Heerlen, The Netherlands. Cash used in investing activities was $27.1 million in the nine months ended September 30, 2022 and reflects cash received in termination of our cross-currency swaps, cash used for production of converter equipment and the renovation of our global headquarters in Concord, Ohio, and an investment in a small private business.
Cash Flows Used in Financing Activities
Net cash used in financing activities was $1.4 million in the nine months ended September 30, 2023 and reflects debt repayments, payments on finance lease liabilities, tax payments for withholdings on stock compensation, and legal fees paid related to a modification of our debt facilities, partially offset by proceeds received from an equipment financing arrangement. Net cash used in financing activities was $4.3 million in the nine months ended September 30, 2022 and reflects debt repayments, payments on finance lease liabilities, and tax payments for withholdings on stock compensation.
Contractual Obligations and Other Commitments
We lease production and administrative facilities as well as automobiles, machinery and equipment. We have various contractual obligations and commercial commitments that are recorded as liabilities in our condensed consolidated financial statements. Other items, such as purchase obligations and other executory contracts, are not recognized as liabilities, but are required to be disclosed. There have been no significant changes outside the ordinary course of business to our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2022 10-K.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2023.
Critical Accounting Policies
Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and various other assumptions that we believe are reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in our 2022 10-K.
Impairment of Goodwill, Indefinite-Lived Intangible Assets, and Long-Lived Assets
We periodically review goodwill and indefinite-lived intangible assets for possible impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value of our goodwill reporting units or identifiable indefinite-lived intangible assets may be less than their fair values. Additionally, we review our long-lived asset groups whenever there is evidence that events or changes in circumstances indicate the carrying value of our asset groups may not be recoverable. If events or circumstances exist, including a continuation of current market conditions, that indicate that the carrying value of our goodwill reporting units or identifiable indefinite-lived intangible assets may be less than their fair values, or the carrying amount of our long lived-asset groups may no longer be recoverable, we may recognize a non-cash impairment of goodwill, identifiable indefinite-lived intangible assets, or long-lived asset groups, which could have a material adverse effect on our consolidated financial condition or results of operations in future periods. For additional information on our accounting principles with respect to goodwill, identifiable indefinite-lived intangible assets, and long-lived assets, please see “Management Discussion & Analysis – Critical Accounting Policies” in our 2022 10-K.
34
As of September 30, 2023, there were no indicators to suggest that it is more likely than not that the fair value of our reporting units and indefinite-lived intangible assets were below their carrying values. As of September 30, 2023, there were no indicators of impairment present for long-lived assets that required us to test for recoverability.
If we fail an impairment test, any non-cash impairment charge may have an adverse effect on our results of operations and financial condition. We will continue to monitor events and circumstances for indicators of impairment in our reporting units, indefinite-lived intangible assets, and asset groups.
Recently Issued and Adopted Accounting Pronouncements
For recently issued and adopted accounting pronouncements, see Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Changes in interest rates affect the amount of interest income we earn on cash, cash equivalents and short-term investments and the amount of interest expense we pay on borrowings under the floating rate portions of our Facilities. A hypothetical 100 basis point increase or decrease in the applicable base interest rates under our Facilities would have resulted in a $6.0 million impact on our cash interest expense for the nine months ended September 30, 2023. We use interest rate swap agreements to manage this exposure.
Refer to Note 7, “Long-Term Debt” and Note 8, “Derivative Instruments” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Foreign Currency Exchange Rate Risk
We are exposed to foreign currency exchange risk related to our transactions and subsidiaries’ balances that are denominated in currencies other than USD, our reporting currency. See “Effect of Currency Fluctuations” in Item 2 previously for more information about our foreign currency exchange rate exposure. We seek to naturally hedge our foreign exchange transaction exposure by matching the transaction currencies for our cash inflows and outflows and maintaining access to credit in the principal currencies in which we conduct business. Additionally, we hedge some of our exposure to foreign currency translation with a cross-currency swap. Refer to Note 8, “Derivative Instruments” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
For the nine months ended September 30, 2023, net revenue denominated in currencies other than USD amounted to $147.7 million or 60.1% of our net revenue for the period. Substantially all of this amount was denominated in Euro. A 10% increase or decrease in the value of the Euro to the USD would have caused our reported net revenue for the nine months ended September 30, 2023 to increase or decrease by approximately $14.8 million.
Commodity Price Risk
While our business is significantly impacted by price fluctuations related to the purchase, production and sale of paper products, we are typically not directly exposed to market price fluctuations in paper purchase or sale prices as we historically have negotiated prices with suppliers on an annual basis and negotiate prices with distributors reflecting competitive market terms. Our strategy has generally been to obtain competitive prices for our products and services and allow operating results to reflect market price movements dictated by supply and demand. However, due to global inflation and other macroeconomic factors, including the conflict in Ukraine, we may be subject to significantly more commodity price volatility than we have historically experienced.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information required to be disclosed in our reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the
35
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective, due to the material weaknesses in internal control over financial reporting that are described in the 2022 10-K.
Notwithstanding such material weaknesses in internal control over financial reporting, our management, including our CEO and CFO, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods presented in this Quarterly Report, in conformity with U.S. generally accepted accounting principles.
Remediation Plans
As previously described in Part II – Item 9A – Controls and Procedures of the 2022 10-K, we continue to implement a remediation plan to address the material weaknesses mentioned above. The weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
The Company believes that we will have remediated certain material weaknesses as described in the 2022 10-K by the end of the calendar year 2023. We may not be able to demonstrate through testing that these controls have been operating effectively for a sufficient period of time to achieve remediation. Progress has been made against Management’s plan to remediate these material weaknesses, but for Management to consider a material weakness remediated the related controls are required to function as anticipated for a minimum period. As the Company is executing its remediation plan in 2023, changes to the timing of remediation activities and delays may be experienced that could delay when the material weakness is considered remediated. Controls may be functioning as expected by the end of 2023 but may not function in their final state for a minimum period in 2023. As part of its remediation plan, Management will put mitigating controls in place to minimize risk associated with any unresolved material weaknesses.
Changes in Internal Control Over Financial Reporting
In response to the material weaknesses described in the 2022 10-K, the Company reviewed the design of its controls and began remediation activities to alleviate the noted control deficiencies. Other than these items, there was no change in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Information about our risk factors is contained in Item 1A of the 2022 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
36
Item 5. Other Information
None.
37
Item 6. Exhibits
Exhibit No. |
|
Description |
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3.1 |
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3.2 |
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4.1 |
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|
|
|
10.1 |
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|
|
|
|
10.2 |
|
|
|
|
|
31.1* |
|
|
|
|
|
31.2* |
|
|
|
|
|
32* |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104* |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
Ranpak Holdings Corp. |
|
|
|
|
|
|
Date: |
October 31, 2023 |
|
By: |
/s/ William Drew |
|
|
|
|
William Drew |
|
|
|
|
Senior Vice President and Chief Financial Officer |
39
Exhibit 31.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(a),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Omar M. Asali, certify that:
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
Date: |
|
October 31, 2023 |
|
|
|
|
|
By: |
|
/s/ Omar M. Asali |
|
|
|
Omar M. Asali |
|
|
|
Chairman and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION BY CHIEF FINANCIAL OFFICER
PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(a),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, William Drew, certify that:
|
Date: |
|
October 31, 2023 |
|
|
|
|
|
By: |
|
/s/ William Drew |
|
|
|
William Drew |
|
|
|
Senior Vice President and Chief Financial Officer |
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with Ranpak Holdings Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Omar M. Asali, the Chairman and Chief Executive Officer and William Drew, the Senior Vice President and Chief Financial Officer of Ranpak Holdings Corp. (the “Company”), each certifies that, to the best of such officer’s knowledge, that:
|
Date: |
|
October 31, 2023 |
|
|
|
|
|
By: |
|
/s/ Omar M. Asali |
|
|
|
Omar M. Asali |
|
|
|
Chairman and Chief Executive Officer |
|
|
|
|
|
By: |
|
/s/ William Drew |
|
|
|
William Drew |
|
|
|
Senior Vice President and Chief Financial Officer |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Net revenue | $ 82.8 | $ 77.8 | $ 245.9 | $ 247.1 |
| Cost of goods sold | 51.3 | 53.4 | 156.7 | 169.8 |
| Gross profit | 31.5 | 24.4 | 89.2 | 77.3 |
| Selling, general and administrative expenses | 20.9 | 26.8 | 64.4 | 86.8 |
| Depreciation and amortization expense | 8.1 | 7.8 | 24.2 | 24.0 |
| Other operating expense , net | 0.9 | 1.5 | 3.5 | 3.4 |
| Income (Loss) from operations | 1.6 | (11.7) | (2.9) | (36.9) |
| Interest expense | 6.8 | 5.3 | 18.4 | 15.2 |
| Foreign currency (gain) loss | (0.7) | (1.2) | 0.2 | (4.1) |
| Other non-operating income, net | (0.1) | (4.0) | (0.8) | (4.0) |
| Loss before income tax expense (benefit) | (4.4) | (11.8) | (20.7) | (44.0) |
| Income tax expense (benefit) | (1.1) | (3.1) | (2.9) | (9.9) |
| Net loss | $ (3.3) | $ (8.7) | $ (17.8) | $ (34.1) |
| Earnings Per Share [Abstract] | ||||
| Basic | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) |
| Diluted | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) |
| Weighted average number of shares outstanding - Class A and C | ||||
| Basic | 82,322,957 | 81,979,986 | 82,297,985 | 81,833,718 |
| Diluted | 82,322,957 | 81,979,986 | 82,297,985 | 81,833,718 |
| Other comprehensive income (loss), before tax | ||||
| Foreign currency translation adjustments | $ (4.6) | $ (9.8) | $ (2.0) | $ (24.3) |
| Interest rate swap adjustments | (2.2) | 3.3 | (5.3) | 14.1 |
| Cross-currency swap adjustments | 2.7 | 2.7 | 1.0 | 7.0 |
| Total other comprehensive income (loss), before tax | (4.1) | (3.8) | (6.3) | (3.2) |
| Provision (benefit) for income taxes related to other comprehensive income (loss) | 0.1 | 1.5 | (1.1) | 5.2 |
| Total other comprehensive income (loss), net of tax | (4.2) | (5.3) | (5.2) | (8.4) |
| Comprehensive loss, net of tax | $ (7.5) | $ (14.0) | $ (23.0) | $ (42.5) |
| Class A | ||||
| Earnings Per Share [Abstract] | ||||
| Basic | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) |
| Diluted | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) |
| Weighted average number of shares outstanding - Class A and C | ||||
| Basic | 79,401,858 | 79,058,887 | 79,376,886 | 78,912,619 |
| Diluted | 79,401,858 | 79,058,887 | 79,376,886 | 78,912,619 |
| Class C | ||||
| Earnings Per Share [Abstract] | ||||
| Basic | $ (0.03) | $ (0.1) | $ (0.21) | $ (0.41) |
| Diluted | $ (0.03) | $ (0.1) | $ (0.21) | $ (0.41) |
| Weighted average number of shares outstanding - Class A and C | ||||
| Basic | 2,921,099 | 2,921,099 | 2,921,099 | 2,921,099 |
| Diluted | 2,921,099 | 2,921,099 | 2,921,099 | 2,921,099 |
| Paper revenue | ||||
| Revenue | $ 64.8 | $ 62.6 | $ 192.4 | $ 199.0 |
| Machine lease revenue | ||||
| Revenue | 13.2 | 11.7 | 38.7 | 36.4 |
| Other revenue | ||||
| Revenue | $ 4.8 | $ 3.5 | $ 14.8 | $ 11.7 |
Unaudited Condensed Consolidated Balance Sheets - Parenthetical - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Class A | ||
| Common stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized (shares) | 200,000,000 | 200,000,000 |
| Common stock, shares issued (shares) | 79,652,315 | 79,086,372 |
| Common stock, shares outstanding (shares) | 79,652,315 | 79,086,372 |
| Class C | ||
| Common stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized (shares) | 200,000,000 | 200,000,000 |
| Common stock, shares issued (shares) | 2,921,099 | 2,921,099 |
| Common stock, shares outstanding (shares) | 2,921,099 | 2,921,099 |
Nature of Operations |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Operations | Note 1 — Nature of Operations Ranpak Holdings Corp. is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-Commerce and industrial supply chains. Through proprietary protective packaging solutions (“PPS”) systems and paper consumables, the Company offers a full suite of protective packaging solutions. The Automated Solutions (“AS”) and Automated Paper Solutions (“APS”) (collectively, “Automation”) product lines provide end-of-line automation systems that solve distinct challenges facing end-users. The Company’s business is global, with a strong presence in the United States and Europe. Throughout this report, when we refer to “Ranpak,” the “Company,” “we,” “our,” or “us,” we are referring to Ranpak Holdings Corp. and all of our subsidiaries, except where the context indicates otherwise. |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation and Summary of Significant Accounting Policies | Note 2 — Basis of Presentation and Summary of Significant Accounting Policies Unaudited Interim Financial Statements — These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for each of the three years ended December 31, 2022, 2021, and 2020, which are included in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 10-K”). The three months ended September 30, 2023 may be further referred to herein as the “third quarter of 2023.” The three months ended September 30, 2022 may be further referred to herein as the “third quarter of 2022.” The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with instructions to Form 10-Q and Rule 10-01 of the Securities and Exchange Commission (“SEC”) Regulation S-X as they apply to interim financial information. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, although we believe that the disclosures made are adequate to make the information not misleading. The interim condensed consolidated financial statements are unaudited but, in our opinion, include all adjustments that are necessary for a fair statement of operations and financial position for the periods presented. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year. Principles of Consolidation — The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries prepared in conformity with GAAP. All intercompany balances and transactions have been eliminated in consolidation. All amounts are in millions, except share and per share amounts and are approximate due to rounding. Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material. Foreign Currency — The nature of business activities involves the management of various financial and market risks, including those related to changes in foreign currency exchange rates. The Company is subject to currency translation exposure because the operations of its subsidiaries are measured in their functional currency, which is the currency of the primary economic environment in which the subsidiary operates. Any currency balances that are denominated in currencies other than the functional currency of the subsidiary are re-measured into the functional currency, with the resulting gain or loss recorded in the foreign currency (gains) losses line-item in our Unaudited Condensed Consolidated Statements of Operations. In turn, subsidiary income statement balances that are denominated in currencies other than USD are translated into USD, our reporting currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the USD are translated into USD in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income. Recently Adopted Accounting Standards — In December 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which gives optional guidance to provide relief for reference rate reform, where certain transactions have transitioned or are transitioning away from the London Interbank Offered Rate (“LIBOR”) to other reference rates, including one-month and three-month USD LIBOR, on which our existing indebtedness and interest rate swap agreements were based. ASU 2022-06 defers the sunset date of ASC Topic 848, Reference Rate Reform (“ASC 848”) from December 31, 2022 to December 31, 2024 to ensure the relief in ASC 848 covers the period of time during which a significant number of modifications may take place. As further disclosed in Note 7, “Long-Term Debt”, we amended the terms of our Credit Agreement to replace the interest rate based on LIBOR and related LIBOR-based mechanics with an interest rate based on the secured overnight financing rate (“SOFR”) and related SOFR-based mechanics. We have elected to apply the practical expedients provided by ASC 848 related to eligible contract modifications as they occur. This election did not have a material impact on our consolidated financial statements, and the impact of applying the election to future eligible contract modifications that occur through December 31, 2024 is also not expected to be material. |
Supplemental Balance Sheet Data and Cash Flow Information |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Balance Sheet Data and Cash Flow Information | Note 3 — Supplemental Balance Sheet Data and Cash Flow Information Cash and cash equivalents — Cash and cash equivalents include securities with original maturities of three months or less and cash in banks. We are invested in a money market fund, which is classified as a cash equivalent because of its short-term, highly liquid nature that is readily convertible to cash. Unrealized gains or losses are included in other non-operating expense (income), net and were immaterial in all periods presented. The balance was approximately $19.3 million and $30.5 million at September 30, 2023 and December 31, 2022, respectively. The fair value of money market funds is considered Level 1 in the fair value hierarchy because they are securities traded in active markets. Refer to Note 10, “Fair Value Measurement” for further detail. Accounts Receivable, net — The components of accounts receivable, net were as follows:
At September 30, 2023, one customer’s accounts receivable balance represented 13% of our accounts receivable balance. At December 31, 2022, no customer’s accounts receivable balance exceeded 10.0% of our accounts receivable balance. Inventories, net — The components of inventories, net were as follows:
Property, Plant and Equipment, net — The following table details our property, plant and equipment, net:
Depreciation expense recorded in cost of goods sold and depreciation and amortization in the unaudited condensed consolidated statements of operations and comprehensive income (loss) was as follows:
Accrued Liabilities and Other – The components of accrued liabilities and other were as follows:
Supplemental Cash Flow Information — Supplemental cash flow information is as follows:
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Segment and Geographic Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment and Geographic Information | Note 4 — Segment and Geographic Information In accordance with ASC 280, Segment Reporting (“ASC 280”), we determined we have two operating segments which are aggregated into one reportable segment, Ranpak. The chief operating decision maker assesses the Company’s performance and allocates resources based on the Company’s consolidated financial information. The aggregation of the two operating segments is based on the Company’s determination that, per ASC 280, the operating segments have similar economic characteristics, and are similar in all of the following areas: the nature of products and services, the nature of production processes, the type or class of customer for their products or services, and the methods used to distribute their products or provide their services. In addition, the operating segments were aggregated for purposes of determining whether segments meet the quantitative threshold for separate reporting. We attribute revenue and gross profit to individual countries based on the selling location. Our products are primarily sold from North America and Europe. As previously noted, segment gross profit includes certain depreciation and amortization expenses that are included in cost of goods sold.
Our customers are not concentrated in any specific geographic region. During the nine months ended September 30, 2023 and 2022, no customers exceeded 10% of net revenue. The following table presents our long-lived assets by geographic region. Refer to Note 12, “Leases” for additional detail on our new leased facility in Eygelshoven, The Netherlands and our new leased facility in Shelton, Connecticut:
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Revenue Recognition, Contracts with Customers |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition, Contracts with Customers | Note 5 — Revenue Recognition, Contracts with Customers Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. Revenue for paper consumables is recognized based on shipping terms, which is the point in time the customer obtains control of the promised goods. Revenue for Automation equipment sales is recognized based on an input method over time. Maintenance revenue is recognized straight-line on the basis that the level of effort is consistent over the term of the contract. Lease components within contracts with customers are recognized in accordance with ASC 842 on a straight-line basis over the terms of the PPS systems agreements with customers, which have durations of less than one year. Sales, value-added, and other taxes collected from customers and remitted to governmental authorities are excluded from revenue. Our paper consumables, automation equipment, and maintenance services are determined to be distinct performance obligations. Free on loan and leased equipment is typically identified as a separate lease component in scope of ASC 842. We have forms of variable consideration present in our contracts with customers, including rebates and other discounts. We estimate variable consideration using either the expected value method or the most likely amount method. We include in the transaction price some or all of an amount of variable consideration estimated to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The time between when a performance obligation is satisfied and when billing and payment occur is closely aligned and performance obligations do not extend beyond one year. The transfer of control of our products results in an unconditional right to receive consideration. Contract assets arise as revenue is recognized prior to billing the customer in accordance with the terms of the contract. Changes in contract assets were as follows:
Deferred revenue represents contractual amounts received from customers that exceed revenue recognized for automation equipment sales, as well as prepayments for machine fees that are amortized over the next quarter. Our enforceable contractual obligations have durations of less than one year and are included in current liabilities on the unaudited condensed consolidated balance sheets. Changes in deferred revenue were as follows:
In addition to the disaggregation of revenue between paper, machine lease, and other revenue, we also disaggregate our revenue by segment geography to assist in evaluating the nature, timing, and uncertainty of revenue and cash flows that may be impacted by economic factors:
North America consists of the United States, Canada and Mexico, among others; Europe/Asia consists of European, Asian (including China), Pacific Rim, South American and African countries, among others. |
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Goodwill, Long-Lived Assets, Intangible Assets and Impairment |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill, Long-Lived and Intangible Assets, Net | Note 6 — Goodwill, Long-Lived Assets, Intangible Assets and Impairment Goodwill, Indefinite-Lived Intangible Assets and Impairment Goodwill represents the excess of purchase price over the fair value of net assets acquired. Trademarks and trade names are accounted for as indefinite-lived intangible assets and, accordingly, are not subject to amortization. We review goodwill on a reporting unit basis and indefinite-lived assets for impairment annually on October 1st and on an interim basis whenever events or changes in circumstances indicate the carrying value of goodwill or indefinite-lived intangible assets may be impaired. As of September 30, 2023, there were no indicators to suggest that it is more likely than not that the fair value of our reporting units and indefinite-lived assets were below their carrying values. The following table shows our goodwill balances by operating segment that are aggregated into one reportable segment:
Finite-Lived or Amortizable Intangible Assets, net Finite-lived or amortizable intangible assets consist of patented and unpatented technology, customer/distributor relationships, and other intellectual property. Impairment of Long-Lived Assets We review our long-lived assets, including amortizable intangible assets; property, plant and equipment; and lease right-of-use assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For long-lived assets, an impairment loss is indicated when the undiscounted cash flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If indicators exist, the loss is measured as the excess of carrying value over the asset group’s fair value, as determined based on discounted future cash flows, asset appraisal and market values of similar assets. As of September 30, 2023, there were no indicators of impairment present for property, plant and equipment or amortizable intangible assets that required us to test for recoverability. The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives:
The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at September 30, 2023:
Amortization expense was $7.2 million and $7.1 million in the third quarter of 2023 and 2022, respectively. Amortization expense was $21.7 million and $21.7 million in the nine months ended September 30, 2023 and 2022, respectively. The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of September 30, 2023 and December 31, 2022:
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Long-Term Debt |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt | Note 7 — Long-Term Debt In 2019, the Company entered into a First Lien Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), which consists of senior secured credit facilities of a $378.2 million USD-denominated first lien term facility (the “First Lien Dollar Term Facility”), a €140.0 million ($152.6 million equivalent) euro-denominated first lien term facility (the “First Lien Euro Term Facility” and, together with the First Lien Dollar Term Facility, the “First Lien Term Facility”) and a $45.0 million revolving facility (the “Revolving Facility” and together with the First Lien Term Facility, the “Facilities”). The First Lien Term Facility matures in June 2026 and the Revolving Facility matures in June 2025. Borrowings under the Facilities, at our option, bear interest at either (1) an adjusted eurocurrency rate or, as of the effectiveness of Amendment No. 2 (as defined below), the SOFR rate, or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings or SOFR borrowings, as applicable, and 2.75% with respect to base rate borrowings, in each case assuming a first lien net leverage ratio of less than 5.00:1.00, subject to a leverage-based step-up to an applicable margin equal to 4.00% for eurocurrency borrowings and SOFR borrowings, as applicable, and 3.00% with respect to base rate borrowings. The interest rate for the First Lien Dollar Term Facility as of September 30, 2023 and December 31, 2022, was 9.43% and 7.88%, respectively. The interest rate for the First Lien Euro Term Facility as of September 30, 2023 and December 31, 2022, was 7.66% and 5.25%, respectively. As of September 30, 2023 and December 31, 2022, no amounts were outstanding under the Revolving Facility. The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5.0 million. As of September 30, 2023, we had $1.3 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $43.7 million. Long-term debt consisted of the following:
The Credit Agreement contains customary events of default, representations and warranties, and affirmative and negative covenants, including restrictions on certain of the Company’s subsidiaries’ ability to incur additional debt and liens or undergo certain fundamental changes, as well as certain financial tests and ratios. We were in compliance with all financial covenants as of September 30, 2023. The Credit Agreement also has customary mandatory prepayment provisions, including the requirement for the borrowers under the Credit Agreement to apply excess cash flow to mandatorily prepay term loans under the Credit Agreement.
On April 4, 2023, the Company entered into the Amendment No. 2 to First Lien Credit Agreement (“Amendment No. 2”) to amend the Credit Agreement to, among other things, replace the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the Credit Agreement with an interest rate based on the SOFR (including a customary spread adjustment) and related SOFR-based mechanics. On June 7, 2023, the Company entered into Amendment No. 3 to First Lien Credit Agreement (“Amendment No. 3”) to amend the Credit Agreement to, among other things, extend the maturity date applicable to the Revolving Facility to June 3, 2025 from June 3, 2024, reduce certain financial covenant ratio levels and modify restrictions on incurrence of incremental debt and other negative covenants. Except as amended by Amendment No. 2 and Amendment No. 3, the remaining terms of the Credit Agreement remain in full force and effect. At the time of Amendment No. 3, the Company also executed the Amendment No. 3 Effective Date and Exit Payment Letter, which provides for a fee of 0.25% of the aggregate amount of all Initial Revolving Credit Commitments and Initial Term Loans, due on the effective date of Amendment No. 3. In addition, fees due upon repayment of the Term Loans and Revolving Loan are as follows: • If the repayment occurs prior to December 31, 2023 (the “First Exit Payment Date”), 0.50% of the Initial Revolving Credit Commitments and Outstanding Term Loans; • If the repayment occurs after the First Exit Payment Date, but prior to June 30, 2024 (the “Second Exit Payment Date”), 0.75% of the Initial Revolving Credit Commitments and Outstanding Term Loans; or • If the repayment occurs after the Second Exit Payment Date, 1.00% of the Initial Revolving Credit Commitments and Outstanding Term Loans.
As the Company expects repayment to occur after the Second Exit Payment Date, the Company has recorded fees equal to 1.00% of the Facilities, or approximately $5 million. These fees are included within the related balances of debt and deferred financing fees as of September 30, 2023. The Company evaluated the amendments to the Credit Agreement entered into during the second quarter of 2023, and determined that there were no provisions requiring bifurcation and treatment as a derivative, and that the transaction constituted a modification rather than an extinguishment. |
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Derivative Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | Note 8 — Derivative Instruments We use derivatives as part of the normal business operations to manage our exposure to fluctuations in interest rates associated with variable interest rate debt and fluctuations in foreign currency translation associated with our global business presence. These derivatives can help decrease the volatility of cash flows affected by changes in interest rates and foreign currency exchange rates. Interest Rate Swap Agreements In January 2019, we entered into a business combination contingent interest rate swap in a notional amount of $200.0 million (the “January 2019 Swap”) to hedge part of the floating interest rate exposure under the First Lien Dollar Term Facility. The January 2019 Swap economically converts a portion of the variable rate debt to fixed rate debt. In September 2019, we amended the January 2019 Swap to extend its term to mature on June 1, 2023 and lower the rate to 2.31% (the “Amended January 2019 Swap”). We concurrently entered into an incremental $50.0 million notional swap at 1.5%, which matured on June 1, 2023 (the “September 2019 Swap”). We designated both the Amended January 2019 Swap and the September 2019 Swap as cash flow hedges and applied hedge accounting. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Changes in fair value are recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. In March 2020, the Amended January 2019 Swap was further amended to lower the rate to 2.1% and extend the maturity to June 1, 2024 (the “Second Amended January 2019 Swap”). We designated the Second Amended January 2019 Swap as a cash flow hedge and applied hedge accounting. A summary of our interest rate swaps is as follows:
The Second Amended January 2019 Swap contains an insignificant financing element that is amortized over the term of the hedging relationship. As of September 30, 2023, we anticipate having to reclassify $5.1 million from accumulated other comprehensive income into earnings during the next twelve months to offset the variability of the hedged items during this period. Cross Currency Swap Agreements In November 2022, we entered into a fixed-to-fixed cross-currency rate swap contract between the Euro and U.S. dollar to protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates and that we designated as a hedge and accounted for as a net investment hedge (the “November 2022 Swap”). At the spot exchange rate of 1.0205, we converted notional amounts of approximately $80.0 million at 5.84% for €78.4 million at 3.95%. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates are economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period, with changes in fair value recorded in currency translation in other comprehensive income (loss) and accumulated other comprehensive income (loss). Components of the November 2022 Swap excluded from the assessment of effectiveness are amortized out of accumulated other comprehensive income (loss) and into interest expense over the life of the November 2022 Swap to maturity on June 1, 2024. In April and July 2022, we terminated our previously outstanding February 2022 and April 2022 cross-currency swaps, respectively, resulting in a cash inflow of approximately $2.8 million and approximately $5.1 million, respectively, which was recorded within other comprehensive income in 2022. The following table summarizes the total fair values of derivative assets and liabilities and the respective classification in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. The net amount of derivatives can be reconciled to the tabular disclosure of fair value in Note 10, “Fair Value Measurement”:
The following table presents the effect of our derivative financial instruments on our unaudited condensed consolidated statements of operations. The income effects of our derivative activities are reflected in interest expense.
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Accumulated Other Comprehensive Income (Loss) |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | Note 9 — Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) is a separate line within the unaudited condensed consolidated statements of equity that reports our cumulative income (loss) that has not been reported as part of net loss. The components of accumulated other comprehensive income (loss) at September 30, 2023 and December 31, 2022 were as follows:
The following table presents the changes in accumulated other comprehensive income (loss) by component:
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Fair Value Measurement |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurement | Note 10 — Fair Value Measurement Financial instruments are required to be categorized within a valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value: • Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activities. The carrying values of cash and cash equivalents (primarily consisting of bank deposits and a money market fund), accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments as of September 30, 2023 and December 31, 2022. The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of our financial instruments as of September 30, 2023 and December 31, 2022:
The money market fund is valued at net asset value and is considered a Level 1 measurement. The money market fund's carrying value approximates its fair value due to the short-term nature of the investment. The fair value of outstanding long-term debt is based on prices and other relevant information generated by market transactions involving identical or comparable debt instruments, which represents a Level 2 measurement. Derivative positions are classified within Level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets and liabilities in active markets. |
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Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
| Income Taxes | Note 11 — Income Taxes For each interim reporting period, we make an estimate of the effective tax rate we expect to be applicable for the full year for our operations. This estimated effective tax rate is used in providing for income taxes on a year-to-date basis. Our effective tax rate was as follows:
The fluctuation in the effective tax rate over the periods presented above was primarily attributable to a tax expense of $0.5 million and $1.8 million related to stock-based compensation shortfall recognized for the three and nine months ended September 30, 2023, respectively. The effective tax rate is less than the U.S. federal statutory rate due primarily to stock-based compensation adjustments. |
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Leases |
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| Leases | Note 12 — Leases We lease automobiles, machinery, equipment, warehouses, and office buildings. We account for these leases in accordance with ASC 842 by recording right-of-use assets and lease liabilities. The right-of-use asset represents our right to use underlying assets for the lease term and the lease liability represents our obligation to make lease payments under the leases. We determine if an arrangement is or contains a lease at contract inception and exercise judgment and apply certain assumptions when determining the discount rate, lease term, and lease payments. ASC 842 requires a lessee to record a lease liability based on the discounted unpaid lease payments using the interest rate implicit in the lease or, if the rate cannot be readily determined, the incremental borrowing rate. Generally, we do not have knowledge of the rate implicit in the lease and, therefore, we use the incremental borrowing rate for a lease. The lease term includes the non-cancelable period of the lease plus any additional periods covered by an option to extend that we are reasonably certain to exercise. In the first quarter of 2023, we commenced a 15-year operating lease for our new regional headquarters in Eygelshoven, the Netherlands. This facility is used for both administrative and production purposes. In the third quarter of 2023, we commenced a 10-year operating lease for our Shelton, Connecticut facility, which we use for production and administrative purposes. This lease requires annual lease payments of approximately $1.0 million. Operating leases and finance leases are included in the condensed consolidated balance sheets as follows:
The components of lease costs, which are included in income from operations in our condensed consolidated statements of operations and comprehensive income (loss), were as follows:
Maturities of lease liabilities as of September 30, 2023 are as follows:
Additional information related to leases is presented as follows:
As previously noted, our machine lease revenue is accounted for under ASC 842 and is recognized on a straight-line basis over the terms of the agreements with customers, which have durations of less than one year. |
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Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 13 — Commitments and Contingencies Litigation We are subject to legal proceedings and claims that arise in the ordinary course of our business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company. There are no amounts required to be reflected in these unaudited interim condensed consolidated financial statements related to contingencies for the three and nine months ended September 30, 2023. Environmental Matters Our operations are subject to extensive and changing U.S. federal, state and local laws and regulations, as well as the laws of other countries that establish health and environmental quality standards. These standards, among others, relate to air and water pollutants and the management and disposal of hazardous substances and wastes. We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or wastes. There are no amounts required to be reflected in these unaudited interim consolidated financial statements related to environmental contingencies. Management believes the Company is in compliance, in all material respects, with environmental laws and regulations and maintains insurance coverage to mitigate exposure to environmental liabilities. Management does not believe any environmental matters will have a material adverse effect on the Company’s future consolidated results of operations, financial position or cash flows. Guarantees We issue bank guarantees from time to time for various purposes that arise out of the normal course of business. These amounts are immaterial for all periods presented. |
Stock-Based Compensation |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | Note 14 — Stock-Based Compensation We expense the fair value of grants of various stock-based compensation programs over the vesting period of the awards. Stock compensation expense is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations. Awards granted are recognized as compensation expense based on the grant date fair value, estimated in accordance with ASC 718, Compensation – Stock Compensation. The grant date fair value is the closing price of our stock on the grant date. Failure to satisfy the threshold service or performance conditions results in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions results in a reversal of previously recognized share-based compensation expense so long as the awards were probable of vesting. Stock compensation expense includes actual forfeitures incurred. The table below summarizes certain data for our stock-based compensation plans:
The Ranpak Holdings Corp. 2019 Omnibus Incentive Plan (as amended, restated, supplemented or otherwise modified from time to time, the “2019 Plan”) rewards employees and other individuals to perform at their highest level and contribute significantly to the success of the Company. The 2019 Plan is an omnibus plan that may provide these incentives through grants of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSU” or “RSUs”), performance awards, other cash-based awards and other stock-based awards to employees, directors, or consultants of the Company. As of September 30, 2023, the pool of shares in the 2019 Plan is summarized as follows:
Restricted Stock Units — RSUs represent a right to receive one share of our common stock that is both nontransferable and forfeitable unless and until certain conditions are satisfied. Typically, RSUs vest ratably over a two-year period. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a ratable basis. Performance-Based Restricted Stock Units — Performance-based restricted stock units (“PRSU” or “PRSUs”) represent a right to receive, to the extent vested and earned, one share of our common stock. Our PRSUs generally follow two forms. One form of PRSU vests over a three-year period with the number of the awards to be earned determined at the end of the initial one-year performance period, based upon attainment of specific business performance goals during such initial one-year performance period. If certain minimum performance levels are not attained in the initial one-year performance period, the awards will be automatically forfeited before vesting. The awards are variable in that PRSUs earned could range from 0% to 150% of the target number of PRSUs granted, contingent on the performance level attained. In 2021, certain executive officers and key employees received a special long-term incentive PRSU award (the “2021 LTIP PRSUs”). The 2021 LTIP PRSUs are generally eligible to be earned based on performance against pre-established performance metrics during our 2023, 2024 and 2025 fiscal years. One-third of the 2021 LTIP PRSUs are eligible to be earned and vest on each of January 1, 2024, January 1, 2025, and January 1, 2026 based on the achievement of performance goals during the one-year period immediately preceding the vesting date (each such one-year period, a “2021 LTIP PRSU Measurement Period”), subject to continued employment on each such vesting date. The number of PRSUs eligible to be earned in respect of each such 2021 LTIP PRSU Measurement Period will be equal to one-third of the target number of PRSUs multiplied by a percentage that corresponds to the level of achievement of our performance goals. The awards are variable in that the PRSUs earned could range from 0% to 300% of the target number of PRSUs granted contingent on the performance level attained. As appropriate, the Company evaluates both its long- and short-term operating plan, and, as part of that evaluation, the likelihood of attaining performance criteria related to management’s variable compensation arrangements. During the second quarter of 2023, management’s assessment of the Company’s attainment of certain performance metrics primarily related to the 2021 LTIP PRSUs resulted in a reduction in expense of approximately $13.0 million which was recorded in the second quarter of 2023 to stock-based compensation expense, which is included within Selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive income. During the third quarter of 2023, management’s assessment of the Company’s attainment of certain performance metrics primarily related to the 2021 LTIP PRSUs resulted in a further reduction in expense of approximately $6.5 million which was recorded in the third quarter of 2023 to stock-based compensation expense, which is included within Selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive income. The fair value of our PRSUs is determined on the grant date. Compensation cost for these awards is recognized based on the probability of achievement of the performance-based conditions. Activity of our RSUs and PRSUs is as follows:
Director Stock Units — Members of the Company’s Board of Directors (“Director(s)”) may elect to receive their quarterly retainer fees in the form of Class A common shares that are covered by an active shelf registration statement. The retainers are paid quarterly, in arrears in the form of cash or stock at the Director’s election, and vest upon issuance. These shares are priced at the closing price of the last business day of the calendar quarter. Additionally, Directors are granted an annual award of RSUs of $0.1 million on the date of the annual shareholder meeting. The number of RSUs is determined by the closing price of Ranpak stock on that date. These RSUs vest at the earlier of the (i) anniversary of the grant date or (ii) the following annual shareholder meeting. The following table includes the number of shares granted and vested for Directors electing to receive retainer payments in shares:
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Earnings (Loss) per Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) per Share | Note 15 — Earnings (Loss) per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution, if any, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method or if-converted method. Diluted EPS excludes potential shares of common stock if their effect is anti-dilutive. If there is a net loss in any period, basic and diluted EPS are computed in the same manner. The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between different classes of common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. We apply the two-class method for EPS when computing net income (loss) per Class A and Class C common shares. As of September 30, 2023, we have not issued any instruments that are considered to be participating securities. Weighted average shares of Class A and Class C common stock have been combined in the denominator of basic and diluted earnings (loss) per share because they have equivalent economic rights. The following table sets forth the computation of our earnings (loss) per share:
The dilutive effect of 0.4 million and 0.5 million shares in the three months ended September 30, 2023 and 2022, respectively, and 0.8 million and 0.9 million shares in the nine months ended September 30, 2023 and 2022, respectively, was omitted from the calculation of diluted weighted-average shares outstanding and diluted earnings per share because we were in a loss position. The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because milestones were not yet achieved for awards contingent on the achievement of performance milestones:
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Transactions with Related Parties |
9 Months Ended |
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Sep. 30, 2023 | |
| Related Party Transactions [Abstract] | |
| Transactions with Related Parties | Note 16 — Transactions with Related Parties On June 3, 2019, upon the closing of Ranpak’s business combination with One Madison Corporation, Ranpak entered into a shared services agreement (the “Shared Services Agreement”) with an entity controlled by our chief executive officer, One Madison Group LLC (the “Sponsor”), pursuant to which the Sponsor may provide, or cause to be provided, certain services to Ranpak. The Shared Services Agreement provides for a broad array of potential services, including administrative and “back office” or corporate-type services and requires Ranpak to indemnify the Sponsor in connection with the services provided by the Sponsor to Ranpak. Total fees under the agreement were not material for the third quarter of 2023 and 2022. Total fees under the agreement amounted to approximately $0.3 million and $0.2 million for the nine months ended September 30, 2023 and 2022, respectively. |
Shareholders' Equity |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Equity [Abstract] | |
| Shareholders' Equity | Note 17 — Shareholders' Equity On July 26, 2022, the Directors authorized a general share repurchase program of the Company’s Class A common stock of up to $50.0 million, with a 36-month expiration. These Class A common stock repurchases may occur in transactions that may include, without limitation, tender offers, open market purchases, accelerated share repurchases, negotiated block purchases, and transactions effected through plans under Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual number of shares repurchased will depend on a variety of different factors and may be modified, suspended or terminated at any time at the discretion of the Directors. There have been no repurchases executed to date. |
Assets Held for Sale |
9 Months Ended |
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Sep. 30, 2023 | |
| Asset Retirement Obligation Disclosure [Abstract] | |
| Assets Held for Sale | Note 18 — Assets Held for Sale In 2021, we entered into a build-to-suit lease agreement for a new Europe/Asia regional headquarters and manufacturing facility in Kerkrade, The Netherlands (the “New Facility”). We completed the construction and occupation of the New Facility in the second quarter of 2023. We own the existing Europe/Asia headquarters and manufacturing facility in Heerlen, The Netherlands. On June 27, 2023, we entered into a definitive agreement to divest our building and land located in Heerlen, The Netherlands at a sale price of $2.9 million. The carrying values of the building and land classified as held for sale in our consolidated balance sheet as of June 30, 2023, were $1.5 million for the building and $1.6 million for the land. Upon classification as held for sale, we recognized a total loss on disposal of $0.2 million within Other operating expenses in the consolidated statements of operations. On September 1, 2023, we completed the sale of the Heerlen facility and received cash proceeds of $2.9 million. No selling costs were incurred. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Principles of Consolidation | Principles of Consolidation — The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries prepared in conformity with GAAP. All intercompany balances and transactions have been eliminated in consolidation. All amounts are in millions, except share and per share amounts and are approximate due to rounding. |
| Use of Estimates | Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material. |
| Foreign Currency | Foreign Currency — The nature of business activities involves the management of various financial and market risks, including those related to changes in foreign currency exchange rates. The Company is subject to currency translation exposure because the operations of its subsidiaries are measured in their functional currency, which is the currency of the primary economic environment in which the subsidiary operates. Any currency balances that are denominated in currencies other than the functional currency of the subsidiary are re-measured into the functional currency, with the resulting gain or loss recorded in the foreign currency (gains) losses line-item in our Unaudited Condensed Consolidated Statements of Operations. In turn, subsidiary income statement balances that are denominated in currencies other than USD are translated into USD, our reporting currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the USD are translated into USD in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income. |
| Recently Adopted Accounting Standards and Recently Issued Accounting Standards | Recently Adopted Accounting Standards — In December 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which gives optional guidance to provide relief for reference rate reform, where certain transactions have transitioned or are transitioning away from the London Interbank Offered Rate (“LIBOR”) to other reference rates, including one-month and three-month USD LIBOR, on which our existing indebtedness and interest rate swap agreements were based. ASU 2022-06 defers the sunset date of ASC Topic 848, Reference Rate Reform (“ASC 848”) from December 31, 2022 to December 31, 2024 to ensure the relief in ASC 848 covers the period of time during which a significant number of modifications may take place. As further disclosed in Note 7, “Long-Term Debt”, we amended the terms of our Credit Agreement to replace the interest rate based on LIBOR and related LIBOR-based mechanics with an interest rate based on the secured overnight financing rate (“SOFR”) and related SOFR-based mechanics. We have elected to apply the practical expedients provided by ASC 848 related to eligible contract modifications as they occur. This election did not have a material impact on our consolidated financial statements, and the impact of applying the election to future eligible contract modifications that occur through December 31, 2024 is also not expected to be material. |
Supplemental Balance Sheet Data and Cash Flow Information (Tables) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Accounts Receivable, Net | Accounts Receivable, net — The components of accounts receivable, net were as follows:
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| Schedule of Inventory, Net | Inventories, net — The components of inventories, net were as follows:
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| Property, Plant and Equipment | Property, Plant and Equipment, net — The following table details our property, plant and equipment, net:
Depreciation expense recorded in cost of goods sold and depreciation and amortization in the unaudited condensed consolidated statements of operations and comprehensive income (loss) was as follows:
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| Schedule of Accrued Liabilities and Other | Accrued Liabilities and Other – The components of accrued liabilities and other were as follows:
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| Schedule of Cash Flow, Supplemental Disclosures | Supplemental Cash Flow Information — Supplemental cash flow information is as follows:
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Segment and Geographic Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenue, Segment Gross Profit from External Customers, Certain Expenses and Long-Lived Assets, by Geographical Areas | We attribute revenue and gross profit to individual countries based on the selling location. Our products are primarily sold from North America and Europe. As previously noted, segment gross profit includes certain depreciation and amortization expenses that are included in cost of goods sold.
The following table presents our long-lived assets by geographic region. Refer to Note 12, “Leases” for additional detail on our new leased facility in Eygelshoven, The Netherlands and our new leased facility in Shelton, Connecticut:
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Revenue Recognition, Contracts with Customers (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Change in contract assets | Contract assets arise as revenue is recognized prior to billing the customer in accordance with the terms of the contract. Changes in contract assets were as follows:
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| Schedule of Change in Deferred Revenue | Our enforceable contractual obligations have durations of less than one year and are included in current liabilities on the unaudited condensed consolidated balance sheets. Changes in deferred revenue were as follows:
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| Revenue from Contracts with Customers Summarized by Segment Geography | In addition to the disaggregation of revenue between paper, machine lease, and other revenue, we also disaggregate our revenue by segment geography to assist in evaluating the nature, timing, and uncertainty of revenue and cash flows that may be impacted by economic factors:
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Goodwill, Long-Lived Assets, Intangible Assets and Impairment (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Goodwill Balances by Operating Segment | The following table shows our goodwill balances by operating segment that are aggregated into one reportable segment:
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| Schedule of Indefinite-Lived Intangible Assets | The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives:
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| Finite-lived Intangible Assets Amortization Expense | The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at September 30, 2023:
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| Schedule of Finite-Lived Intangible Assets | The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of September 30, 2023 and December 31, 2022:
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Long-Term Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Instruments | Long-term debt consisted of the following:
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Derivative Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Instruments | A summary of our interest rate swaps is as follows:
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| Schedule of Derivative Assets at Fair Value | The net amount of derivatives can be reconciled to the tabular disclosure of fair value in Note 10, “Fair Value Measurement”:
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| Schedule of Derivative Instruments, Gain (Loss) | The following table presents the effect of our derivative financial instruments on our unaudited condensed consolidated statements of operations. The income effects of our derivative activities are reflected in interest expense.
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Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of AOCI | The components of accumulated other comprehensive income (loss) at September 30, 2023 and December 31, 2022 were as follows:
The following table presents the changes in accumulated other comprehensive income (loss) by component:
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Fair Value Measurement (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements, Recurring and Nonrecurring | The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of our financial instruments as of September 30, 2023 and December 31, 2022:
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Effective Income Tax Rate Reconciliation | Our effective tax rate was as follows:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases and Finance Leases included in Condensed Consolidated Balance Sheets | Operating leases and finance leases are included in the condensed consolidated balance sheets as follows:
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| Summary of Components of Lease Costs | The components of lease costs, which are included in income from operations in our condensed consolidated statements of operations and comprehensive income (loss), were as follows:
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| Summary of Maturities of Lease Liabilities | Maturities of lease liabilities as of September 30, 2023 are as follows:
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| Summary of Additional Information Related to Leases | Additional information related to leases is presented as follows:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement, Cost by Plan | The table below summarizes certain data for our stock-based compensation plans:
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| Share-based Payment Arrangement, Activity | As of September 30, 2023, the pool of shares in the 2019 Plan is summarized as follows:
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| Share-based Payment Arrangement, Restricted Stock Unit, Activity | Activity of our RSUs and PRSUs is as follows:
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| Share-based Payment Arrangement, Nonemployee Director Award Plan, Activity | The following table includes the number of shares granted and vested for Directors electing to receive retainer payments in shares:
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Earnings (Loss) per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share, Basic and Diluted | Weighted average shares of Class A and Class C common stock have been combined in the denominator of basic and diluted earnings (loss) per share because they have equivalent economic rights. The following table sets forth the computation of our earnings (loss) per share:
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| Schedule of Antidilutive Securities Excluded from Computation of Earnings | The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because milestones were not yet achieved for awards contingent on the achievement of performance milestones:
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Supplemental Balance Sheet Data and Cash Flow Information - Components of Accounts Receivable, Net (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accounts receivable | $ 32.7 | $ 33.7 |
| Allowance for doubtful accounts | (0.5) | (0.7) |
| Accounts receivable, net | $ 32.2 | $ 33.0 |
Supplemental Balance Sheet Data and Cash Flow Information - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Accounts Notes And Loans Receivable [Line Items] | ||
| Cash | $ 19.3 | $ 30.5 |
| No Customer | Maximum | Accounts Receivable | Customer Concentration Risk | ||
| Accounts Notes And Loans Receivable [Line Items] | ||
| Concentration risk, percentage | 10.00% | |
| One Customer | Maximum | Accounts Receivable | Customer Concentration Risk | ||
| Accounts Notes And Loans Receivable [Line Items] | ||
| Concentration risk, percentage | 13.00% |
Supplemental Balance Sheet Data and Cash Flow Information - Schedule of Inventory, Net (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Raw materials | $ 10.6 | $ 12.4 |
| Work-in-process | 2.3 | 5.7 |
| Finished goods | 5.9 | 7.2 |
| Total inventories | 18.8 | 25.3 |
| Reserve for obsolescence | (0.2) | (0.3) |
| Inventories, net | $ 18.6 | $ 25.0 |
Supplemental Balance Sheet Data and Cash Flow Information - Schedule of Property. Plant and Equipment (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant, and equipment | $ 278.3 | $ 245.6 |
| Accumulated depreciation | (143.7) | (121.6) |
| Property, plant, and equipment, net | 134.6 | 124.0 |
| Land | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant, and equipment | 2.4 | 4.0 |
| Buildings and Improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant, and equipment | 11.9 | 12.9 |
| Machinery and Equipment | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant, and equipment | 34.9 | 34.0 |
| Computer and office equipment | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant, and equipment | 12.2 | |
| Converting Machines | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant, and equipment | $ 197.5 | $ 182.8 |
Supplemental Balance Sheet Data and Cash Flow Information - Schedule of Depreciation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | $ 9.2 | $ 9.0 | $ 27.7 | $ 31.1 |
| Cost of goods sold | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | 8.3 | 8.3 | 25.2 | 28.7 |
| Depreciation and amortization expense | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | $ 0.9 | $ 0.7 | $ 2.5 | $ 2.4 |
Supplemental Balance Sheet Data and Cash Flow Information - Schedule of Accrued Liabilities and Other (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Employee compensation | $ 4.0 | $ 2.1 |
| Taxes | 1.5 | 3.4 |
| Professional fees | 2.9 | 0.8 |
| Bonus | 2.7 | 0.7 |
| Interest | 2.2 | 1.9 |
| Interest rate swap liability, current portion | 0.5 | 0.0 |
| Warranty reserve | 0.6 | 0.7 |
| Other | 3.7 | 1.0 |
| Accrued liabilities and other | $ 18.1 | $ 10.6 |
Supplemental Balance Sheet Data and Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
| Interest paid | $ 7.3 | $ 4.9 | $ 19.2 | $ 15.2 |
| Income taxes paid | 0.5 | 0.3 | 2.5 | 2.1 |
| Non-cash investing activities | ||||
| Right-of-use assets obtained in exchange for lease liabilities | 6.1 | 0.8 | 20.7 | 1.1 |
| Capital expenditures in accounts payable | $ 1.2 | $ 0.0 | $ 1.2 | $ 0.4 |
Segment and Geographic Information - Narrative (Details) - Segment |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Number of operating segments | 2 | |
| Number of reportable segments | 1 | |
| No Customer | Revenue | Customer Concentration Risk | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Concentration risk, percentage | 10.00% | 10.00% |
Segment and Geographic Information - Schedule of Revenue, Segment Gross Profit from External Customers, Certain Expenses and Long-Lived Assets, by Geographical Areas (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Segment Reporting Information [Line Items] | |||||
| Revenues | $ 82.8 | $ 77.8 | $ 245.9 | $ 247.1 | |
| Gross profit | 31.5 | 24.4 | 89.2 | 77.3 | |
| Selling, general and administrative expenses | 20.9 | 26.8 | 64.4 | 86.8 | |
| Depreciation and amortization expense | 8.1 | 7.8 | 24.2 | 24.0 | |
| Other operating expense , net | 0.9 | 1.5 | 3.5 | 3.4 | |
| Interest expense | 6.8 | 5.3 | 18.4 | 15.2 | |
| Foreign currency (gain) loss | (0.7) | (1.2) | 0.2 | (4.1) | |
| Other non-operating income, net | (0.1) | (4.0) | (0.8) | (4.0) | |
| Income (loss) before income tax benefit | (4.4) | (11.8) | (20.7) | (44.0) | |
| Long-lived assets | 156.4 | 156.4 | $ 130.0 | ||
| North America | |||||
| Segment Reporting Information [Line Items] | |||||
| Revenues | 34.9 | 33.4 | 98.2 | 98.6 | |
| Gross profit | 12.8 | 9.7 | 32.0 | 30.6 | |
| Long-lived assets | 79.5 | 79.5 | 65.4 | ||
| Europe/Asia | |||||
| Segment Reporting Information [Line Items] | |||||
| Revenues | 47.9 | 44.4 | 147.7 | 148.5 | |
| Gross profit | 18.7 | $ 14.7 | 57.2 | $ 46.7 | |
| Long-lived assets | $ 76.9 | $ 76.9 | $ 64.6 | ||
Revenue Recognition, Contracts with Customers - Schedule of Change in Deferred Revenue (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
| Beginning balance | $ 0.9 | $ 3.1 |
| Deferral of revenue | 12.2 | 7.5 |
| Recognition of revenue | (10.3) | (9.0) |
| Ending balance | 2.8 | 1.6 |
| Contract assets [Member] | ||
| Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
| Beginning balance | 0.0 | 0.0 |
| Revenue Recognized In Excess of Billings | 1.7 | 0.0 |
| Ending balance | $ 1.7 | $ 0.0 |
Revenue Recognition, Contracts with Customers - Revenue from Contracts with Customers Summarized by Segment Geography (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Disaggregation of Revenue [Line Items] | ||||
| Net revenue | $ 82.8 | $ 77.8 | $ 245.9 | $ 247.1 |
| ASC 606 | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Net revenue | 69.6 | 66.1 | 207.2 | 210.7 |
| ASC 842 | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Machine lease revenue | 13.2 | 11.7 | 38.7 | 36.4 |
| Net revenue | 82.8 | 77.8 | 245.9 | 247.1 |
| North America | ASC 606 | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenue | 28.9 | 28.1 | 80.8 | 82.3 |
| Europe/Asia | ASC 606 | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenue | $ 40.7 | $ 38.0 | $ 126.4 | $ 128.4 |
Goodwill, Long-Lived Assets, Intangible Assets and Impairment - Schedule of Goodwill Balances by Operating Segment (Details) $ in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Goodwill [Roll Forward] | |
| Gross carrying value, beginning balance | $ 446.7 |
| Currency translation | (1.3) |
| Gross carrying value, ending balance | 445.4 |
| North America | |
| Goodwill [Roll Forward] | |
| Gross carrying value, beginning balance | 338.8 |
| Currency translation | 0.0 |
| Gross carrying value, ending balance | 338.8 |
| Europe | |
| Goodwill [Roll Forward] | |
| Gross carrying value, beginning balance | 107.9 |
| Currency translation | (1.3) |
| Gross carrying value, ending balance | $ 106.6 |
Goodwill, Long-Lived Assets, Intangible Assets and Impairment - Schedule of Finite-Lived Intangible Assets Amortization Expense (Details) $ in Millions |
Sep. 30, 2023
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| 2023 | $ 7.2 |
| 2024 | 28.9 |
| 2025 | 28.4 |
| 2026 | 28.0 |
| 2027 | 27.9 |
| Thereafter | 122.9 |
| Finite-lived intangible assets, Net | $ 243.3 |
Goodwill, Long-Lived Assets, Intangible Assets and Impairment - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||
| Amortization expense | $ 7.2 | $ 7.1 | $ 21.7 | $ 21.7 |
Goodwill, Long-Lived Assets, Intangible Assets and Impairment - Schedule of Intangible Asset Remaining Useful Life (Details) - Weighted Average |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible asset, useful life (years) | 9 years | 10 years |
| Customer/distributor relationships | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible asset, useful life (years) | 11 years | 11 years |
| Patented/Unpatented Technology | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible asset, useful life (years) | 7 years | 8 years |
| Intellectual Property | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible asset, useful life (years) | 7 years | 7 years |
Derivative Instruments - Schedule of Interest Rate Swaps (Details) - Designated as Hedging Instrument - Cash Flow Hedge - USD ($) $ in Millions |
Sep. 30, 2023 |
Jun. 01, 2023 |
Dec. 31, 2022 |
Mar. 27, 2020 |
|---|---|---|---|---|
| Derivative [Line Items] | ||||
| Derivative, notional amount | $ 200.0 | $ 250.0 | ||
| Percentage of Debt Instrument Outstanding | 80.00% | 100.00% | ||
| September 2019 Swap | ||||
| Derivative [Line Items] | ||||
| Derivative, fixed interest rate | 1.50% | 1.50% | ||
| Derivative, notional amount | $ 50.0 | $ 50.0 | ||
| September 2019 Swap | First Lien Term Facility | ||||
| Derivative [Line Items] | ||||
| Percentage of Debt Instrument Outstanding | 20.00% | |||
| January 2019 Swap | ||||
| Derivative [Line Items] | ||||
| Derivative, fixed interest rate | 2.12% | 2.31% | 2.09% | 2.10% |
| Derivative, notional amount | $ 200.0 | $ 200.0 | ||
| January 2019 Swap | First Lien Term Facility | ||||
| Derivative [Line Items] | ||||
| Percentage of Debt Instrument Outstanding | 80.00% | 80.00% |
Derivative Instruments - Schedule of Derivative Assets and Liabilities at Fair Value (Details) - Designated as Hedging Instrument - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Derivative [Line Items] | ||
| Derivative liability, fair value | $ (2.7) | $ (3.7) |
| Cash Flow Hedge | Interest Rate Swap | ||
| Derivative [Line Items] | ||
| Derivative asset, fair value | 4.6 | 8.1 |
| Cash Flow Hedge | Accrued liabilities and other | Interest Rate Swap | ||
| Derivative [Line Items] | ||
| Derivative liability, fair value | (0.5) | 0.0 |
| Cash Flow Hedge | Prepaid Expenses And Other Current Assets | Interest Rate Swap | ||
| Derivative [Line Items] | ||
| Derivative liability, fair value | 5.1 | 6.3 |
| Derivative asset, fair value | (2.7) | (3.7) |
| Cash Flow Hedge | Other Assets | Interest Rate Swap | ||
| Derivative [Line Items] | ||
| Derivative asset, fair value | $ 0.0 | $ 1.8 |
Derivative Instruments - Effect of Derivative Instruments on Statement of Financial Position (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Derivative [Line Items] | ||||
| Interest expense | $ 6.8 | $ 5.3 | $ 18.4 | $ 15.2 |
| Interest Expense | Interest Rate Swap | ||||
| Derivative [Line Items] | ||||
| Interest rate swap agreements designated as cash flow hedges | (2.4) | 0.4 | (6.2) | 1.2 |
| Cross currency swap agreement designated as net investment hedge, amounts excluded from effectiveness testing | $ (0.3) | $ (0.2) | $ (1.0) | $ (1.0) |
Income Taxes - Schedule of Effective Tax Rate (Details) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Tax Disclosure [Abstract] | ||||
| Effective tax rate, percent | 26.00% | 26.80% | 14.20% | 22.60% |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
| Income Taxes [Line Items] | ||
| Tax expense | $ 0.5 | $ 1.8 |
Leases - Schedule of Operating Leases and Finance Leases included in Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Lease assets | ||
| Operating lease right-of-use assets, net | $ 21.8 | $ 6.0 |
| Finance lease right of use assets, net | 1.5 | 1.4 |
| Total lease assets | 23.3 | 7.4 |
| Lease liabilities | ||
| Operating lease liabilities, current | 3.0 | 2.0 |
| Operating lease liabilities, non-current | 23.2 | 4.0 |
| Finance lease liabilities, current | 0.8 | 0.7 |
| Finance lease liabilities, non-current | 0.8 | 0.8 |
| Total lease liabilities | $ 27.8 | $ 7.5 |
| Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, plant and equipment, net | |
| Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Current portion of long-term debt | |
| Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term debt |
Leases - Schedule of Components of Lease Costs (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Operating leases | ||
| Operating lease costs | $ 3.6 | $ 2.2 |
| Variable lease costs | 0.2 | 0.2 |
| Short-term lease costs | 0.2 | 0.0 |
| Total operating lease costs | 4.0 | 2.4 |
| Finance leases | ||
| Amortization of right-of-use asset | 0.6 | 0.5 |
| Interest on finance lease liabilities | 0.1 | 0.1 |
| Total finance lease costs | $ 0.7 | $ 0.6 |
Leases - Narrative (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Operating Lease, Liability | $ 26.2 |
| Annual lease payments | $ 1.0 |
| Eygelshoven (Netherlands) [Member] | |
| Lessor, Operating Lease, Term of Contract | 15 years |
Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Millions |
Sep. 30, 2023
USD ($)
|
|---|---|
| Operating leases | |
| 2023 | $ 1.3 |
| 2024 | 5.2 |
| 2025 | 5.1 |
| 2026 | 3.6 |
| 2027 | 3.1 |
| 2028 and Thereafter | 24.7 |
| Total lease payments | 43.0 |
| Less lease interest | (16.8) |
| Total lease liabilities | 26.2 |
| Finance leases | |
| 2023 | 0.2 |
| 2024 | 0.8 |
| 2025 | 0.5 |
| 2026 | 0.2 |
| 2027 | 0.0 |
| 2028 and Thereafter | 0.0 |
| Total lease payments | 1.7 |
| Less lease interest | (0.1) |
| Total lease liabilities | 1.6 |
| Total | |
| 2023 | 1.5 |
| 2024 | 6.0 |
| 2025 | 5.6 |
| 2026 | 3.8 |
| 2027 | 3.1 |
| 2028 and Thereafter | 24.7 |
| Total lease payments | 44.7 |
| Less lease interest | (16.9) |
| Total lease liabilities | $ 27.8 |
Leases - Schedule of Additional Information to Leases (Details) - USD ($) $ in Millions |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Operating leases | |||
| Weighted average remaining lease term | 10 years 10 months 24 days | 3 years 3 months 18 days | |
| Weighted average discount rate | 9.90% | 5.40% | |
| Finance leases | |||
| Weighted average remaining lease term | 2 years 3 months 18 days | 2 years 6 months | |
| Weighted average discount rate | 6.50% | 3.40% | |
| Cash paid for amounts included in the measurement of lease liabilities | |||
| Operating cash flows from operating leases | $ 3.6 | $ 2.1 | |
| Operating cash flows from finance leases | 0.1 | 0.0 | |
| Financing cash flows from finance leases | 0.7 | 0.6 | |
| Total cash paid | 4.4 | 2.7 | |
| Leased assets obtained in exchange for new operating lease liabilities | 20.1 | 0.8 | |
| Leased assets obtained in exchange for new finance lease liabilities | 0.6 | 0.3 | |
| Right-of-use assets obtained in exchange for lease liabilities | $ 20.7 | $ 1.1 | |
Stock-Based Compensation - Summary of Certain Data for Stock-Based Compensation Plans (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Share-Based Payment Arrangement [Abstract] | ||||
| Stock-based compensation expense | $ (5.1) | $ 6.7 | $ (11.8) | $ 20.8 |
| Tax (expense) benefit for stock-based compensation | (1.3) | (0.1) | (3.0) | 0.7 |
| Stock-based compensation expense, net of tax | $ (3.8) | $ 6.6 | $ (8.8) | $ 21.5 |
Stock-Based Compensation - 2019 Plan (Details) - 2019 Plan - Share-based Payment Arrangement, Option |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
shares
| |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Maximum allowed for issuance | 13,118,055 |
| Awards granted | (8,955,338) |
| Awards forfeited | 1,671,363 |
| Available for future awards | 5,834,080 |
| Awards vested | 2,827,224 |
Stock-Based Compensation - Director Stock Unit Activity (Details) - Director Stock Units |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Quantity | |
| Outstanding at December 31, 2022 (shares) | shares | 51,240 |
| Granted (shares) | shares | 269,509 |
| Vested (shares) | shares | (104,029) |
| Outstanding at September 30, 2023 (shares) | shares | 216,720 |
| Weighted Average Grant Date Fair Value | |
| Outstanding at December 31, 2022 (USD per share) | $ / shares | $ 11.72 |
| Granted (USD per share) | $ / shares | 3.59 |
| Vested (USD per share) | $ / shares | 8.35 |
| Outstanding at September 30, 2023 (USD per share) | $ / shares | $ 3.23 |
Earnings (Loss) per Share - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Earnings Per Share Basic [Line Items] | ||||||||
| Net loss | $ (3,300) | $ (2,100) | $ (12,400) | $ (8,700) | $ (11,300) | $ (14,100) | $ (17,800) | $ (34,100) |
| Net loss attributable to common stockholders for basic and diluted EPS | $ 3,300 | $ (8,700) | $ (17,800) | $ (34,100) | ||||
| Loss per share attributable to common stockholders | ||||||||
| Basic (USD per share) | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) | ||||
| Diluted (USD per share) | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) | ||||
| Basic weighted average common shares outstanding (shares) | 82,322,957 | 81,979,986 | 82,297,985 | 81,833,718 | ||||
| Dilutive weighted average common shares outstanding (shares) | 82,322,957 | 81,979,986 | 82,297,985 | 81,833,718 | ||||
| Class A | ||||||||
| Earnings Per Share Basic [Line Items] | ||||||||
| Proportionate share of net loss | $ (3,200) | $ (8,400) | $ (17,200) | $ (32,900) | ||||
| Loss per share attributable to common stockholders | ||||||||
| Basic (USD per share) | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) | ||||
| Diluted (USD per share) | $ (0.04) | $ (0.11) | $ (0.22) | $ (0.42) | ||||
| Basic weighted average common shares outstanding (shares) | 79,401,858 | 79,058,887 | 79,376,886 | 78,912,619 | ||||
| Dilutive weighted average common shares outstanding (shares) | 79,401,858 | 79,058,887 | 79,376,886 | 78,912,619 | ||||
| Class C | ||||||||
| Earnings Per Share Basic [Line Items] | ||||||||
| Proportionate share of net loss | $ (100) | $ (300) | $ (600) | $ (1,200) | ||||
| Loss per share attributable to common stockholders | ||||||||
| Basic (USD per share) | $ (0.03) | $ (0.1) | $ (0.21) | $ (0.41) | ||||
| Diluted (USD per share) | $ (0.03) | $ (0.1) | $ (0.21) | $ (0.41) | ||||
| Basic weighted average common shares outstanding (shares) | 2,921,099 | 2,921,099 | 2,921,099 | 2,921,099 | ||||
| Dilutive weighted average common shares outstanding (shares) | 2,921,099 | 2,921,099 | 2,921,099 | 2,921,099 | ||||
Earnings (Loss) per Share - Additional Information (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Earnings Per Share [Abstract] | ||||
| Dilutive effect of shares omitted from the calculation of diluted weighted average shares outstanding and diluted earnings per share | 0.4 | 0.5 | 0.8 | 0.9 |
Earnings (Loss) per Share - Schedule of Antidilutive Securities (Details) - shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Total antidilutive securities | 1,713,777 | 3,559,496 | 1,094,712 | 3,417,060 |
| RSUs and PRSUs | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Total antidilutive securities | 1,713,777 | 3,559,496 | 1,094,712 | 3,417,060 |
Transactions with Related Parties - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| One Madison Group LLC | ||
| Related Party Transaction [Line Items] | ||
| Related party transaction, fees | $ 0.3 | $ 0.2 |
Shareholders' Equity - Narrative (Details) - Common Class A [Member] $ in Millions |
Jul. 26, 2022
USD ($)
|
|---|---|
| Class of Stock [Line Items] | |
| Share repurchase program maximum amount | $ 50.0 |
| Stock repurchase program period | 36 months |
Assets Held for Sale (Additional Information) (Details) - USD ($) $ in Millions |
9 Months Ended | ||
|---|---|---|---|
Sep. 01, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
|
| Asset Retirement Obligation Disclosure [Abstract] | |||
| Revenue from Asset Held for Sale | $ 2.9 | ||
| Carrying Value of Building Held for Sale | $ 1.5 | ||
| Carrying Value of Land Held for Sale | $ 1.6 | ||
| Loss from Asset Held for Sale | $ 0.2 | ||
| Sale of the Heerlen Facility and Received Cash Proceeds | $ 2.9 |